Since the inauguration of U.S. President Donald Trump on January 20, 2025, almost every industry across Canada has been disrupted due to new tariffs that have either been implemented or continue to be threatened.
At the time of the publication of the April issue of Canadian Process Equipment & Control News, the U.S. had imposed 25-per-cent tariffs on all goods imported from Canada and Mexico not covered under the Canada-United States-Mexico Agreement (CUSMA). For those products covered under CUSMA, President Trump granted a one-month exemption until April 2, 2025, with 10-per-cent tariffs placed on non-CUMSA energy products and non-CUSMA potash. There was also a 25-per-cent tariff placed on all Canadian steel and aluminum steel imports.
Industry leaders from across Canada have expressed their concerns regarding the potential damage these tariffs, and retaliatory tariffs placed by the Canadian government, would have on the Canadian and American economies.
“Tariffs are taxes and costs will rise, with consumers and businesses alike shouldering the weight of these tariffs at a time when cost-of-living is already high in both countries,” said Greg Moffatt, president and CEO for the Chemistry Industry Association of Canada (CIAC). “While a tariff and policy response from Canada is warranted, we must not lose sight of the pressing need to future-proof our economy.”
Moffatt spoke to us from his hotel in Washington, D.C., after meeting with the U.S. Chamber of Commerce, alongside the Canadian Chamber of Commerce, discussing the importance of keeping positive trade relationships between the U.S. and Canada.
“It’s very helpful to get perspective on what’s driving the agenda,” Moffatt says.
One of the challenges with navigating tariffs for the chemistry industry is that unlike certain sectors that might produce a handful of different products, the chemistry industry is far more complicated.
“Chemistry isn’t one thing, it’s many, and some of it is exported, principally into the U.S.,” Moffatt explains. “Others are sold into a domestic market to meet a uniquely Canadian or localized demand for those products. So, first and foremost, it’s not a one-size-fits-all.”
Complicating things further is the impact on the plastics value chain, also represented by CIAC.
“We’re representing resin manufacturers, molders and converters that actually convert the resin into products. We represent recyclers. We represent brand owners that are bringing products into the marketplace. And so, again, not one-size-fits-all there,” Moffatt says. “When you look at the molders or converters, some of those entities are small- and medium-sized enterprises. In many cases, they’re privately owned, and they employ less than 100 employees. And for those folks that are selling the lion’s share of their products into the U.S., it’s an existential event.”
Adding to the challenge of navigating U.S.-imposed tariffs for these small- and medium-sized producers is the prospect of being impacted by retaliatory tariffs imposed by the Canadian government.
“They very well could be importing inputs from the U.S. into their manufacturing process,” Moffatt says.
“Some of the products that our members produce go back and forth across the border many times before they actually end up in a finished good – you hear about that in the automotive sector. You hear about that in the technology sector, and chemistry and plastics are inputs into 95 per cent of the things that we touch on a day-in and day-out basis. So, this is a serious issue. It will be impactful.”
According to the CIAC, Canada’s chemistry and plastics products represent $115 billion in trade with the U.S., and the U.S. having a small trade surplus of $2.5 billion. Approximately 77 per cent of Canada’s chemistry exports are destined for the U.S. and 54 per cent of Canada’s chemistry imports come from the U.S. The overwhelming majority of Canada’s plastics and resin exports (94 per cent) are shipped to the U.S., with an estimated value of $19 billion. About 64 per cent ($16 billion) of Canada’s plastic and resins are imported from the U.S.
Moffatt stated that the cost of a new car could increase by $4,000 with the new tariffs being implemented. It will also spike the cost of new housing builds, another sector where the chemistry sector provides a wide variety of materials for building envelopes, windows, and more. At the time of our interview, tariffs have been collected for two days for goods crossing across the border from Canada into the U.S. Moffatt said the tariffs are essentially taxes and they are an attack on the profitability of businesses on both sides of the border.
“On the industrial chemicals side, for the most part, our members are 24-seven, 365-day continuous process manufacturers and they don’t store a lot of products on site. They rely on a reliable and functioning rail system to move their products to customers, and it’s a continuous process. Those folks would have been captured by this,” he says.
Moffatt is hoping that CUSMA-compliant goods will continue to be unaffected by tariffs on both sides of the border.
“This notion that CUSMA compliant goods would not be affected going forward, that is the right signal,” he says. “What you’re also hearing is that the North American economy is highly integrated. It’s not just in chemistry and plastics. It’s in agriculture. It’s in autos. It’s in clean technology. Across the spectrum, the North American economy is highly integrated, and I believe that message is starting to filter through.”
While it is difficult to say whether the announced tariffs will accelerate the renewal or renegotiation of CUSMA, Canada must be ready for the possibility.
“We need to be open to it. There is nothing that we’re going to do internally that is going to change the fact that the U.S. is our largest trading partner. They’re our neighbour. They’re the closest market. They’re one of the largest markets. We need to be open, and we need to be ready.”
Canadian Manufacturers & Exporters (CME) president Dennis Darby also discussed the potential damage that could be done to both countries’ economies with the implementation of the tariffs.
“Canada and the U.S. share an integrated manufacturing sector that has been built up over decades supporting millions of jobs on both sides of the border,” Darby stated. “At a time of global economic uncertainty, our two countries should be working together to strengthen North American industry – not implementing measures that will hurt businesses, workers, and consumers in both nations.”
Oil and gas sector
The Canadian Association of Petroleum Producers (CAPP) president and CEO Lisa Baiton also released a statement in response to the implementation of across-the-board U.S. tariffs, stating that the association and its member companies are “deeply disappointed in the U.S. Administration’s decision to impose across-the-board tariffs on Canadian goods.”
“As Canadians we must now recognize the relationship with our closest friend, ally, and trading partner has fundamentally changed. In this moment, we must act with urgency to focus on the Canadian national interest,” Baiton stated.
CAPP stated that without a stronger global market reach and energy security that Canada has “little leverage” in its trade relationship with the U.S.
“North American and global oil and natural gas markets are complex, which make it difficult to predict how the application of a 10-per-cent tariff on Canadian oil and natural gas will impact supply, demand and trade patterns,” Baiton stated. “What we do know is that our greatest competitive advantage through economic cycles is our energy advantage. Canadian oil and natural gas producers have demonstrated they are innovative and resilient and will find the best ways to mitigate the impact of tariffs and realign themselves to thrive in a dynamic global market.”
Mining sector pushes partnership
The Mining Association of Canada (MAC) stated that in lieu of tariffs, the two countries should focus on how to deepen their collaboration on a partnership for critical minerals that started in 2020 during President Trump’s first term in office under the Joint Action Plan on Critical Minerals Collaboration.
“The minerals and metals industry in Canada stands ready to strengthen our relationship with the United States, ensuring the free flow of these essential resources that drive economic growth, defense capabilities, and technological advancement on both sides of the border,” stated Pierre Gratton, president and CEO of MAC.
Canada’s mining industry is a vital sector that contributes $161 billion annually to the country’s GDP, and accounts for 21 per cent of Canada’s total domestic exports. The mining sector employs approximately 694,000 people directly and indirectly across the country, and is proportionally the largest private sector employer of Indigenous peoples in Canada, and a major customer of Indigenous-owned businesses, the MAC stated.
“MAC members produce mineral and metal products that are globally traded. U.S. tariffs will lead Canada’s mining sector to pursue new and deepen existing alternative markets, as well as alternative sources of inputs necessary for the continued operation of mining facilities. This will hurt U.S. businesses,” Gratton stated.
Increasing competitiveness
While Canada continues to build on and secure its vitally important trade relationship with the U.S., the country also needs to prepare itself for adapting to a new economic future, and that starts with much-needed regulatory changes.
“Our regulatory system needs to change. There’s not enough government money, taxpayer money, to solve the problem. We need to focus on enabling the expenditure of private capital in a way that we haven’t in the last 10-plus years. We need to change the way we do things in Canada,” Moffatt says.
One of the ways Canada can make the country more attractive to private sector financing is through increased investment in critical transportation infrastructure.
“We need to double down on our investments in critical transportation infrastructure – roads, rail, ports,” Moffatt says. “There is a near annual disruption of labour in Canada’s critical transportation system. We need to sit down, business and labour and government, and come up with a framework that deals with issues of competitive wages and benefits without holding the Canadian economy hostage.”
The constant labour disruptions have hurt Canada’s reputation as a trading partner, Moffatt says, adding that fixing this issue is the first step towards trading more with other markets.
The CIAC recently released a statement saying, “Canada needs a competitiveness framework specifically designed to attract investment and stimulate economic growth.” In that statement, the CIAC suggested that the federal and provincial governments prioritized the following strategic initiatives:
• Comprehensive tax and regulatory reform: Canada must implement pro-growth tax and regulatory policies that attract investment, encourage innovation, and drive economic expansion.
• Critical trade infrastructure investments: Strengthening infrastructure, including ports, rail, and road networks, is essential for maintaining Canada’s position as a reliable trading partner.
• Labour stability: Ongoing labour disruptions have damaged Canada’s reputation as a dependable supplier. Addressing labor stability is crucial for ensuring continued economic resilience.
• Diversification of trade markets: Expanding into new markets beyond North America—both east and west—is vital for economic growth and long-term prosperity.
“Increasing our economic competitiveness should be the guiding principle for all policy actions in the weeks and months ahead. We need all stakeholders in Canada to recognize and address the gravity of the changing economic landscape,” Moffatt stated.
The MAC stated that the Canadian federal and provincial governments should use this moment in history to “address long-standing barriers to Canadian economic growth, including the removal of internal trade barriers, complex, expensive and lengthy regulatory processes and uncompetitive tax policies.”
“It is time for all governments to double down to create the conditions for improved competitiveness, investment, productivity and prosperity,” Gratton stated.
CAPP stated that Canada urgently needs a policy overhaul to create “a streamlined and durable regulatory framework that allows projects with viable markets and motivated investors to succeed.”
“Strengthening market access and trade relationships is critical to economic growth. Diversifying exports beyond North America into Asian and European markets will promote long-term stability,” Baiton stated. “At home, securing Ontario and Quebec’s energy supply must be a national priority. We are at a significant moment in Canada’s history – we need to seize this moment. The choices we make today will determine whether we become a global energy leader or continue to fall behind. With decisive leadership, smart reforms, and a renewed commitment to investment, we can unlock the full potential of our natural resources, support our partners and make new ones, create jobs, and build a more prosperous and resilient economy for Canadians.”
While initiatives like expanding trade into global markets and more strongly securing the country’s energy security would certainly benefit Canada’s economy, it is unrealistic to think the U.S. will not always be Canada’s biggest trade partner.
“Let’s not kid ourselves, we will always be trading with the U.S., and Mexico, because they’re our closest neighbours,” Moffatt said. “But there’s some things that we need to do in Canada to reset and make Canadian business, Canadian workers, more competitive and more productive, and generate more value and wealth for Canadians and for the Canadian government.”
