New 50% U.S. tariffs could hit $28B in Canadian exports, putting manufacturers, forestry and small businesses under fresh pressure.
New U.S. tariffs could test CUSMA
Canada has had a key layer of protection during the U.S. trade fight.
That protection could soon weaken.
U.S. President Donald Trump plans to impose new 50 per cent tariffs on a wide range of Canadian goods. If they take effect, industry groups say the move could put a serious crack in the protection that CUSMA has provided.
Jasmin Guenette, vice-president of national affairs at the Canadian Federation of Independent Business (CFIB), says the change could create even more uncertainty for Canadian firms.
“If those new tariffs are implemented, there will be a crack in the CUSMA shield,” Guenette said.
The concern is simple. Businesses have relied on CUSMA rules to keep many goods moving across the border without extra duties. However, the new tariffs could reach products that once had more protection.
Billions in Canadian exports at risk
The impact could be large.
The CFIB says about two in five Canadian exporters have products that could face the new tariffs. Of those businesses, 77 per cent expect to lose revenue if the tariffs start.
Meanwhile, 35 per cent say they could lose at least half of their revenue.
Canadian Manufacturers and Exporters president Dennis Darby estimates that the tariffs could cover almost $28 billion in annual Canadian exports to the U.S.
That figure represents more than five per cent of Canada’s goods exports to the American market.
Darby warns that a 50 per cent tariff could make many Canadian products too costly for U.S. buyers. As a result, some Canadian manufacturers could lose access to their biggest export market.
More sectors could feel the pain
The new tariffs would also come on top of existing U.S. duties.
Canadian steel and aluminum already face 50 per cent tariffs. Lumber, motor vehicles and other sectors also face trade barriers.
The Bank of Canada has warned that these measures are already hurting exports. By February, Canadian lumber exports had fallen to about 20 per cent below their 2024 average.
The forestry industry now fears another major blow.
Derek Nighbor, president of the Forest Producers Association, called the proposed tariff another significant hit for Canadian workers and businesses.
He said Canada and the U.S. need to lower trade barriers and protect North American supply chains. He also called for a lasting solution to the softwood lumber dispute.
Tariffs could reach everyday products
The new measures could reach far beyond metals and lumber.
Darby says U.S. tariffs could hit Canadian-made:
- Beverages
- Plastics
- Electrical equipment
- Furniture
- Paper and packaging
- Building materials
- Clothing
- Sporting goods
That broader reach has industry leaders worried.
In 2025, just seven Canadian product groups made up 56 per cent of all duties paid by U.S. importers on Canadian goods, according to Export Development Canada.
Those groups included vehicles, aluminum products, aircraft parts, steel products and motor vehicle parts.
The proposed tariffs could spread the pressure across a much wider group of Canadian exporters.
Some industries face greater risks
Canada’s economy may not take the same hit in every sector.
A recent Royal Bank of Canada report says the overall economy could hold up if the tariffs take effect. However, some industries could face a much sharper slowdown.
Plastics, electrical machinery, furniture and home appliance makers could be especially exposed.
One reason is the small share of U.S. imports that comes from Canada in these areas. If Canada supplies only a small part of the U.S. market, American buyers may find it easier to switch to other suppliers.
The situation differs for products such as aluminum.
Canada supplies a large share of U.S. aluminum imports. Therefore, American buyers may have fewer quick alternatives.
Businesses are already changing plans
The tariff threat is affecting Canadian companies even before a new round of duties begins.
Canadian Manufacturers and Exporters says nearly three-quarters of manufacturers have reported negative effects from metal tariffs.
One-third have also delayed or cancelled investments in Canada.
Companies are reviewing contracts, shipments and suppliers. They are also rethinking hiring and major spending.
The reason is clear: businesses do not know what trade rules will look like next.
Small firms have less room to adapt
Small businesses may face an even tougher choice.
Many have fewer financial resources than large companies. They may also have fewer options when it comes to changing suppliers or finding new markets.
Guenette says some small firms are already absorbing U.S. tariff costs to keep their American customers.
That strategy can protect sales in the short term. However, it can also squeeze profit margins.
For Canadian exporters, the bigger question now is what comes next.
If the new 50 per cent tariffs take effect, the CUSMA shield could become less reliable. And if that happens, businesses may have to rethink prices, supply chains and investment plans once again.
For now, Canadian industry is urging Ottawa to find a path that keeps cross-border trade open and protects North American supply chains.
