Many Canadians breathed a sigh of relief when U.S. President Donald Trump’s global tariffs did not add to those already on Canada, but experts warn his trade war with China could still hurt Canadians.
Trump threatened additional tariffs on China on Monday on social media after China said it would retaliate against the U.S. “reciprocal” tariffs announced last week.
“If China does not withdraw its 34 per cent increase above their already long term trading abuses by tomorrow, April 8th, 2025, the United States will impose ADDITIONAL Tariffs on China of 50 per cent, effective April 9th,” he wrote on Truth Social.
“Additionally, all talks with China concerning their requested meetings with us will be terminated!”
Even though Canada was not directly hit by Trump’s latest round of “reciprocal” tariffs, experts say a U.S.-China trade war could still weigh heavy on Canadian wallets.
“It’s significant when you have the two big economic gorillas starting to fight,” said Matt Poirier, vice-president of federal government relations at the Retail Council of Canada.
“Even though we’re not part of that fight, we’re in the ring with them.”
Poirier said many Canadian retailers source U.S. goods that are, in turn, sourced from Chinese suppliers. They are now navigating uncertainty as Canadian consumers start cutting expenses.
“Anticipated economic slowdowns will affect consumer confidence and ask any retailer, and they’ll tell you that consumer confidence is key to their business,” he said.
“Usually, if America is tariffing goods, it’s only tariffing goods that are coming into their country. Goods that are transiting through from China on the way to Canada won’t be [taxed].”
However, Poirer said normal rules might not apply with the current uncertainty.
“You can take your rule book and throw it out the window,” he said.
Some of the biggest American tech companies, including tech giant Apple, have supply chains linked to China.
The pressure on the smartphone maker was seen in its stock price sliding for three consecutive days.
Apple, like other big tech firms, relies on China for its manufacturing.
Most of the world’s electronics trade hinges on the U.S. and China. According to the American Enterprise Institute, China is the world’s biggest manufacturer of electronics, while the U.S. is the largest designer and buyer of the consumer good.
According to the think tank, which cited UN data, China exports 63 per cent of the world’s smartphones and 72 per cent of the world’s computers.
The U.S. has also put tariffs on Taiwan, which accounts for 90 per cent of the world’s advanced semiconductor manufacturing. Semiconductors are a crucial element for most modern electronics, including electric vehicles.
Jeanel Alvarado, a retail strategist based in Edmonton, said Canadians should gear up for costlier electronics this year.
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“Canadians can expect to see an immediate increase in electronics, such as smart phones, smart watches tablets and game consoles,” she said.
According to reports, Nintendo has already delayed pre-orders in Canada for its highly anticipated Switch 2.
Kevin O’Marah, co-founder of U.S.-based supply chain management firm Zero100, which represents clients such as Walmart, Nestle and PepsiCo, said no product will be left untouched by price increases.
“Tariffs will increase prices across the board. Upstream costs will rise and companies will have no choice but to pass them along. Once big retailers start raising prices, others will follow. The herd effect will kick in,” he said.
“Consumers will feel it in capital goods [such as] cars, appliances, large consumer electronics. It will be easy to see the impact on a household budget. Electronics will be hit hard. Both price and availability will be bad news for consumers.”
He said not only will most goods get costlier, but they might also simply be unavailable on U.S. and Canadian shelves.
“Product shortages could arise when sudden shifts in tariff levels cause companies to cancel purchase orders,” he said.
Electronics is one of Canada’s largest imports, accounting for nine per cent of all Canadian imports. The U.S. and China are the two biggest sources of electronics for Canada.
Clothing and accessories retailers across the United States are delaying orders and freezing hiring ahead of tariff hikes that take effect Wednesday on products imported from Vietnam and China.
Businesses like Nike and Lululemon face an impossible choice: offset the cost of tariffs by raising prices by some 40 per cent — potentially cratering sales — or absorb the cost increase and further strain already thin profit margins.
Nike shares have dropped 14 per cent since markets closed on April 2, the day Trump announced tariffs, while Adidas shares lost 16 per cent, Puma shares are down 18 per cent, and North Face owner VF Corp shares fell 31 per cent.
Alvarado said Canadians will feel their shopping carts get costlier.
“When it comes to apparel, footwear will be hit the hardest as many shoes aren’t imported until a couple months before the season starts,” she said.
Alvarado said, however, that consumers are likely to feel the price pressures down the line.
“For now, customers won’t see a surge in prices, as retailers would already have their spring and summer inventory of casual shoes, sneakers and sandals. While in the next couple months they’d be expecting next season’s shipment for their winter items, with tariffs now in place, customers can expect higher prices for winter apparel that has not been shipped out to stores yet,” she said.
Poirer said retailers don’t even have the option of moving supply out of China.
“If you’re looking at your clothing, even here in Canada, you’ll notice that it’s coming from Bangladesh or Cambodia or India more than it used to,” he said.
He said Trump’s plan to shift manufacturing back to the U.S. would likely be unfeasible.
“Textile manufacturing left North America a long time ago. To repatriate those types of manufacturing jobs is really challenging too, because you don’t have any of the structure that’s remaining. And it’s really high labour input costs to produce those things, which is why it’s gone to other Asian markets that have lower labor costs,” he said.
The United States Fashion Industry Association has warned that Trump’s global tariffs will upend the industry’s highly integrated supply chain.
“For instance, a bale of cotton might be grown in Texas, shipped to Europe to be spun into yarn, sent to Korea for fabric production, then to Vietnam for garment assembly, and finally to the U.S. for retail sale— back in Texas. Additionally, these garments may be sold not only in the U.S. but also in global markets such as Singapore, Japan, Dubai, or London,” USFIA spokesperson Stephanie Gauzens said in a statement last week after Trump announced his tariffs.
For some sectors, the price rise will not be immediate.
However, experts are warning that decisions being made now will have ripple effects months down the line.
“It’s like watching a slow-moving train accident,” said Mina Tadrous, assistant professor at the Leslie Dan Faculty of Pharmacy at the University of Toronto.
Tadrous co-authored a research paper published Monday tjhat says tariffs and counter-tariffs on pharmaceuticals could create worldwide medicine shortages across the world over the next few months.
“Just like a car, a drug has multiple components coming from very different countries. The average drug sitting on our shelves probably has components in it coming from four to five different countries,” Tadrous said.
“As protectionism rises and more and more tariffs are placed, we’re going to see the supply chain being strained.”
O’Marah added that “the impact on health care could be the most devastating.”
“Health insurance providers will face pressure as they try to protect margins while angry patients react to rising costs,” he said.
Alvarado said, “Furniture prices will be hit quite hard as a lot of furniture is pre-ordered and then shipped out.”
Poirer said the loss of the U.S. as an export market could end up benefiting consumers in other parts of the world.
“What you’re going to see is rerouting of global supply chains across the board, away from the U.S. and into Europe and Canada and other markets,” he said.
“There might be some upsides, particularly if a lot of diverted goods from China and [other] Asian markets need to find a home somewhere. Will that be Canada and Europe? There might be some upside for consumers, but bottom line is this isn’t the way we want to get that upside.”
That potential silver lining comes with a lot of uncertainty and Poirer said the hope is that Trump’s tariffs will go away.
“Our hope, certainly on the Canadian side, is that Americans will notice and they won’t be happy and they’ll pass that message along to their elected officials. But how long will that take? And will it be strong enough opposition to move the needle? That’s still unknown.”
— with files from The Associated Press and Reuters.
