‘Only certainty is uncertainty’: Canadian businesses most pessimistic in years as Trump’s term turns two

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“Our clients don’t want to be caught flat-footed with (the) next tariff costs, issues that weren’t covered in many of their contracts when the tariff uncertainties first appeared,” he said. “There is a recognition that the U.S. is not going away as a prime market. They are trying to de-risk the uncertainty.”

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David Paterson, Ontario’s trade representative in Washington, D.C., said he’s been impressed by the adjustments some businesses have been able to make, often without layoffs or other obvious signs of stress.

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“Tariffs are having an impact, (but) companies are incredibly smart and resilient at finding ways to either find new markets or figuring out how to maintain production,” he said.

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Still, he said it’s difficult to plan and pivot when the Trump administration is continuing to consider whether to place products from semiconductors to pharmaceuticals into tariff territory. And companies such as furniture makers and snowmobile manufacturers that were not affected by the first wave of tariffs on steel and other raw materials have since been pulled into the trade war.

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“It’s a very simplistic thing to say that Canada has the exemption for everything except auto, steel and aluminum. But when you start to figure out the derivative impact … that is one of the challenges,” Paterson said. “And it’s not just in Ontario; it’s Manitoba, Saskatchewan (and the) Eastern provinces.”

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A year ago, the biggest concern facing cabinet makers in Canada was a shortage of skilled labour. Even though Trump’s threat to double the tariff imposed in October didn’t materialize this month, the reprieve did little to ease their uncertainty about how to move forward.

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“These are big swings and (it’s) difficult for anyone to plan,” said Sandra Wood, executive director of the Canadian Kitchen Cabinet Association, whose members export around $600-million worth of goods to the U.S. each year.

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The association estimates that about 20 per cent of the industry is directly hit by tariffs, but there are concerns about the trickle-down effects on the entire industry. Moreover, she said, the uncertainty isn’t just coming from the tariffs. There are signs the Canadian housing market is softening, while the trade war is diverting global goods, including furniture and cabinets, to Canada.

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“Our industry is impacted by foreign imports entering Canada at below fair market value,” Wood said. “No one saw this coming.”

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Danby Products Ltd., which sells microwaves, mini-fridges and portable air conditioners, is expecting flat to slightly soft sales in Canada, but exports to the U.S. will definitely be down as a result of the tariffs, Jim Estill, the Guelph, Ont.-based company’s chief executive, said.

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“As a business, we are being cautious, which means there is less capital investment happening and that ripples through everything,” he said.

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The appliance business isn’t the only one he’s involved in that is being hurt. He bought Arctic Equipment Manufacturing Corp., which has operations in Ontario and Quebec, in 2024, but a 50 per cent tariff on steel now makes that company’s products less competitive in the U.S.

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“We will lose much of our U.S. business,” Estill said, adding that the upcoming talks to determine the future of CUSMA are weighing on many business decisions.

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“CUSMA renegotiation adds great uncertainty,” he said.

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Dennis Darby, chief executive of Canadian Manufacturers and Exporters, said his organization is hearing from businesses that are hesitant to embark on significant new capital investments or expansion without seeing forward momentum by federal and provincial governments to reduce regulatory burdens, address tax competitiveness and eliminate interprovincial trade barriers.