What you can do to manage the impact of tariffs

You’ve probably heard about tariffs and trade wars, but how do they actually impact Canadians, both now and in the future? While the past few years have seen plenty of ups and downs when it comes to trade with the U.S., tariffs — taxes on imported goods — still play a big role in the economy. Whether you’re a business owner, a consumer, or just trying to stay on top of what’s happening, here’s how the tariffs affect Canadians in the short, medium, and long term, and what you can do to minimize their impact. 

Short-term impacts: price hikes and supply chain problems 

Once tariffs are imposed, the cost of goods could potentially increase —for both businesses and consumers. Some companies may choose to transfer their increased costs to consumers right away, while others may wait until they need to reorder inventory. Some industries, like manufacturing and agriculture, will likely be hit harder than others.  

Other potential impacts: 

• Export challenges: For Canadian businesses that sell to the US, higher costs mean lower demand, which can hurt their bottom line. 

• Supply chain delays: Goods don’t just cross the border once. Often, they cross multiple times, and tariffs slow that down, leading to delays and higher shipping costs. 

What you can do: 

1. Expect price increases: You may see higher prices on some products. Keeping an eye on your budget and adjusting where you can, will help. 

1. Support local: Whenever possible, shop Canadian-made goods. Supporting local businesses helps reduce the reliance on imports, and it’s good for the economy. 

1. Get financial guidance: This may be a good time to speak with an advisor. Whether you want to take specific action, or you just have questions about everything that’s going on, we can help you navigate the impact of these changes and ensure your finances are on track. 

Medium-term impacts: adapting to new trade rules 

In the medium term, Canada will continue adjusting to the effects of tariffs as trade relationships evolve. As few things could unfold in the coming months as a result: 

• Shifting trade relationships: While the USMCA has opened up opportunities for some industries, most will face challenges with the new tariffs. Certain tariffs will remain in place, and businesses that rely on the US market will need to figure out how to adapt. 

• New tariffs may pop up: The US could impose new tariffs or change existing ones, which would affect Canadian businesses and consumers. So, the situation may not be completely stable yet. 

• Businesses will adapt: Canadian businesses may look to sell to other countries outside the US to reduce risk. While it’ll take time, this could lead to new trade opportunities. 

What you can do: 

1. Look beyond the US: If you’re a business owner, consider diversifying your market to other countries. Canada has trade deals with places like the European Union and China, which could help you reduce reliance on the US. 

1. Be strategic about spending: Prices may continue to rise as businesses pass on some of the costs of tariffs. Think about where you can cut back or adjust spending to keep your finances in check. 

1. Invest in innovation: If you’re running a business, think about how technology and new practices can help you stay competitive. Whether it’s using automation or improving efficiency, this can help offset some of the cost increases. 

Long-term impacts: economic shifts and new opportunities 

Looking further ahead, tariffs could lead to major changes in how Canada does business with the US. But, with change comes opportunity. Over time, Canadian businesses will adapt to new economic realities and may even thrive in new sectors. 

What’s happening in the long run: 

• Industry changes: Some sectors may decline, while others — like clean tech or advanced manufacturing — could grow. The economy might look very different, but there could be more opportunities in emerging industries. 

• Stronger local industries: Over time, Canadian industries may become more self-sufficient, creating new jobs and reducing reliance on imports. 

What you can do: 

1. Support innovation: If you’re an entrepreneur, consider focusing on industries like tech, renewable energy, and advanced manufacturing. These sectors are likely to see growth in the coming years. 

1. Think globally: For businesses, consider diversifying into other markets. The EU, Asia, and other emerging economies could become more important trading partners. 

1. Reskill and upskill: As the economy shifts, jobs will evolve. Take time to invest in learning new skills, whether it’s through courses, certifications, or workshops. The more adaptable you are, the better. 

Wrapping up: stay resilient, adapt, and look ahead 

Tariffs may feel like a roadblock, but they’re also an opportunity for Canadians to rethink how we do business and adapt to new global realities. Whether it’s adjusting your spending habits, supporting local businesses, or looking for new markets, there are steps you can take to minimize the impact. 

At the same time, it’s important to remember that change is inevitable. The economy will adjust, new industries will emerge, and Canadian businesses will continue to innovate and grow. By staying informed, adaptable, and proactive, we can all play a role in navigating this evolving trade landscape. 

 

This article is provided for general information purposes only. It is not to be relied upon as financial, tax, or investment advice or guarantees about the future, nor should it be considered a recommendation to buy or sell. Information contained in this article, including information relating to interest rates, market conditions, tax rules, fees, and other investment factors are subject to change without notice and Cost Capital Savings Federal Credit Union is not responsible to update this information. All third party sources are believed to be accurate and reliable as of the date of publication and Coast Capital Savings Federal Credit Union does not guarantee accuracy or reliability of such sources. Readers should consult their own professional advisor for specific financial, investment, and tax advice tailored to their needs to ensure that individual circumstances are considered properly and action is taken based on the latest available information.