The Waterloo Region is bracing for economic fallout as trade tensions continue to rise between Canada and the United States. Imposition on U.S. imports, such as steel and aluminium, won’t impact the Waterloo Region as much as other locations, such as Hamilton and Sault Ste. Marie.
According to a report by the Canadian Chamber of Commerce, Southwestern Ontario ranked third among regions most affected by the U.S. and Canada’s trade tensions. The automotive and parts manufacturing sector would be the second most negatively impacted by U.S. tariffs.
“This would suggest business contracting and potentially closing, leading to local unemployment increases,” said Brian McCaig, a professor at Wilfrid Laurier University specializing in economic development and inter- national trade.
Cities including Kitchener, Cambridge, Waterloo, Brantford and Guelph are located east on Highway 401 and specialize in producing auto parts, other advanced manufacturing, machinery and equipment with agricultural exports.
For example, Guelph is home to Canada’s second-largest auto parts maker, Linamar.
McCaig also said there’s not much that can be done since the real motivation for the tariff threats is unknown. “If Canada retaliates by imposing tariffs on imports from the U.S., there will be a double whammy, as it will hurt Canadian consumers and Canadian-based firms that import inputs from the U.S,” McCraig said. He also said retaliation might be necessary to prevent or reduce the threat of U.S. tariffs.
Karen Redman, a politician and the chair of Waterloo Region, voiced her concern regarding the growing trade tensions. On Feb. 3, Redman released a statement requesting the Waterloo Region staff to explore options for action, including limiting the impact of tariffs on regional services and exploring potential procurement measures.
“Our community is facing an uncertain time. It goes beyond pol- icy, politics, or trade. This is about people and the strain this is going to put on so many in our community,” Redman said.
Economic concerns about job loss and business closures are growing across the region. Businesses like Ethel’s Lounge are adjusting to new practices to cope with the effects of the tariff threats.
Chris Gardener, the kitchen manager at Ethel’s Lounge, said they won’t purchase any more alcohol and beverages from the U.S. and opt to buy those in Canada.
“All businesses are affected by the tariffs. People are spending less in times of uncertainties,” Gardner said.
Some businesses, particularly those that export to the U.S., are already experiencing a drop in orders as U.S. purchasers become more concerned about the possibility of a 25 per cent tariff on their purchases from Canadian firms.
Trade tensions will not only impact employment and prices for goods, but also affect Canadian productivity.
As local businesses brace for the impact of trade disruptions, McCaig suggests several strategies to help mitigate the economic fallout. These include expanding exports to new markets, liberalizing trade across Canadian provinces and offering temporary subsidies to the hardest-hit firms.
“The tension will lower investment as firms wait to see what happens in March,” said McCaig. “It will cause firms to spend more time and resources developing new strategies for coping with the trade tensions.”
Contributed Photo/Should we Live Here on YouTube
