By Paul Vieira
OTTAWA--Almost half of Canadian manufacturers could move some or all of their operations to the U.S. should the hefty 25% U.S. tariffs on Canadian imports remain in place for an extended period, the head of an exporters' advocacy group says.
Dennis Darby, chief executive of the Canadian Manufacturers and Exporters, said Monday the tariffs on Canadian imports represent an "existential threat" for the country's factory sector, which employs 1.8 million people and accounts for about 9% of the country's gross domestic product.
Darby said in an interview that his conversations with producers indicate a sizable chunk have shelved investment plans until they figure out how long this tariff conflict might last. Over the weekend, President Trump imposed a 25% on Canadian imports, invoking emergency powers because of what he says is a failure by Canadian authorities to deter the flow of illegal drugs such as fentanyl into the U.S. That 25% tariff is set to kick in Tuesday.
Trump had also imposed a similar tariff on Mexico, but on Monday agreed to pause the levy on its southern neighbor for a month because of commitments from Mexican officials to work with U.S. authorities on fighting fentanyl trafficking.
Darby, whose group represents 2,500 factory owners, said members are discussing plans, if necessary, to shift operations southward. He pegs the share of members mulling such an option at between 40% and 45%. "And that's bad for Canada. It's obviously bad for our sector."
Trump has said one of his goals from tariffs is to persuade companies to move their operations to the U.S.
Internal surveys and anecdotal evidence suggest about a tenth of manufacturers could absorb the additional 25% cost over a sustained period, Darby said. "Let's hope this is not something that [the tariffs] will be a long-term change, but if it is, that will completely upend current supply chains."
Statistics Canada data indicate that exports to the U.S. account for about a fifth of the country's economic output.
Write to Paul Vieira at paul.vieira@wsj.com
(END) Dow Jones Newswires
February 03, 2025 13:58 ET (18:58 GMT)
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