The U.S. is by far Superior Glove Work’s biggest market, with 70 per cent of the work and safety gloves it makes destined for south of the border.Carlos Osorio/The Globe and Mail
Weeks before his return to the White House, Donald Trump is already sending shockwaves through the Canadian business community.
The U.S. president-elect promised this week to impose 25-per-cent tariffs on imports from Canada and Mexico over border security concerns – a plan that many executives and economists are skeptical will become reality.
Even so, companies are preparing for a tumultuous four years under Mr. Trump, given the trade skirmishes that defined his first term in office. Small and mid-sized manufacturers are especially vulnerable to steep tariffs because many of them have become tightly integrated with the U.S. market over three decades of free trade.
The Globe and Mail spoke with five executives about how they’re strategizing for Trump 2.0.
Superior Glove has spent the past year building its first American manufacturing facility in North Carolina. Gloves produced in that facility can bypass any potential tariffs and sell directly into the U.S. market.Carlos Osorio/The Globe and Mail
Superior Glove Works
When Tony Geng first heard Mr. Trump’s tariff plan, the owner of Superior Glove Works Ltd. flashed back to 2017 and the early days of the first Trump administration.
Back then, during the renegotiation of the North American free-trade agreement into what is now known as the U.S.-Mexico-Canada Agreement, the Americans wanted the removal of certain provisions related to textiles and apparel.
“In the end, what was needed was kept in, but not before a whole lot of worrying and sleepless nights while those negotiations were going on,” Mr. Geng said in an interview.
“This new announcement has a very similar taste to what happened back then and it brings back the same worries until it is settled.”
Acton, Ont.-based Superior Glove has three production facilities in Canada – one at its headquarters and two in Newfoundland – that collectively employ about 450 people. The U.S. is by far the company’s biggest market, with 70 per cent of the work and safety gloves it makes destined for south of the border.
“Being a Canadian company, we want to make as much as we possibly can in Canada, even if it costs us, say, 15- or 20-per-cent more to provide in Canada, but add a 25-per-cent tariff and it is going to become pretty hard to do anything in Canada,” Mr. Geng said.
One key difference between 2017 and today is that Superior Glove has spent the past year building its first American manufacturing facility in North Carolina. Gloves produced in that facility, with operations set to begin in the spring of 2025, can bypass any potential tariffs and sell directly into the U.S. market.
“We thought we should do something to mitigate the protectionist threat,” Mr. Geng said, “but when we started that plan, it was just out of the recognition that the U.S. is our biggest market so we really should have some manufacturing presence there.”
However, the plan for the U.S. facility was to produce new products while existing products continued to come from Canada and two other plants Superior owns in Honduras. The North Carolina facility was never intended to replace any Canadian production and Mr. Geng said Superior Glove would not be able to shift enough production there to offset the impact of any potential tariffs.
Acton, Ont.-based Superior Glove has three production facilities in Canada – one at its headquarters and two in Newfoundland – that collectively employ about 450 people.Carlos Osorio/The Globe and Mail
“In hindsight I am extra glad we started this plan over a year ago so we aren’t totally behind the eight-ball, though it really does seem like the end result of this, if it were to happen, is to drive business to China rather than more business and manufacturing jobs to the States,” he said.
China already produces the vast majority of the world’s gloves and Mr. Geng said producers there would be best positioned to absorb the cost of any tariffs because of their low cost of labour and materials. That would be an ironic outcome given China is the primary target of Mr. Trump’s tariff plans.
Superior also buys most of its raw materials, such as cotton and polyester, from the U.S., but Mr. Geng said “if the gloves end up being made in China instead, the Chinese aren’t going to buy cotton from the States or polyester from the States. It would just be an even bigger net loss for the United States, so these tariffs just really don’t seem like a great plan.”
-Jameson Berkow
Kacee Vasudeva, owner of auto parts plant Ultra-Form Manufacturing Ltd., is negotiating a $2-million sale to a U.S. customer.Christopher Katsarov/The Globe and Mail
Ultra-Form Manufacturing
From his low-slung factory in the northwest corner of Toronto, Kacee Vasudeva competes with auto-parts makers in Mexico, China and Europe. The Trump tariff would make this a lot harder.
Mr. Vasudeva’s company, Ultra-Form Manufacturing, turns chunks of steel and aluminum into fittings and components used in a car’s fluid systems – brake, cooling and power train. Three-quarters of the products are shipped eight times a week to parts makers in the U.S. and Mexico, where they are added to other components and sold to car makers for final assembly. Even the goods he sends to Canadian companies wind up crossing North American borders one way or another and would be hit by Mr. Trump’s promised 25-per-cent tariff.
Mr. Vasudeva, who employs 45 people – most of them highly skilled machinists – is negotiating a $2-million sale to a U.S. customer. He fears the deal will be lost if Mr. Trump imposes the levy.
“If he puts it on, we may not be competitive. We may lose the U.S. customer,” Mr. Vasudeva said.
Mr. Trump’s promised tariffs on Canadian and Mexican imports ignited fears of economic devastation in much of Canada, which depends on the U.S. for 75 per cent of its exports. Makers of auto parts and vehicles in Canada employ about 125,000 people and exported $102-billion of products in 2023. Most of this went to the U.S. while $1.9-billion in goods were sent to Mexico, another major supplier to the U.S.
Three-quarters of Ultra-Form Manufacturing's products are shipped eight times a week to parts makers in the U.S. and Mexico.Christopher Katsarov/The Globe and Mail
Like other auto parts, the fittings turned out by Ultra-Form cross the U.S. and Mexican borders a few times before becoming part of a finished vehicle. It’s this integrated nature of car-making that underpins the trade agreement upon which North America has relied for mostly tariff-free commerce. This interdependence has allowed companies in all three countries to invest in technology and compete for a piece of the massive U.S. market, which saw 15.5 million new vehicles sold in 2023.
That’s why, for Mr. Vasudeva, the threat of a U.S. tariff is a betrayal.
“We are like two brothers here,” he said. “We are not different. We pay the same wages. We have the same rules and laws. We have to be fair. Why we are being punished? If they have to punish [a trade partner], they should punish Mexico and China.”
-Eric Atkins
Arctic Snowplows
Jim Estill is clear on what Canadian policymakers should do if the U.S. enacts steep tariffs: retaliate.
Earlier this year, Mr. Estill acquired Arctic Snowplows, a London, Ont.-based manufacturer of heavy equipment for snow clearance, which has been in operation for 55 years. A “considerable amount” of their product is shipped to the U.S., he said, so any new duties would hurt their competitiveness in that market.
If Mr. Trump followed through on the tariffs, Arctic Snowplows would refocus its sales efforts on Canada and not spend any marketing dollars in the U.S., Mr. Estill said. It’s possible the company could offset the loss of U.S. revenue with more business in Canada, he added.
But this glass-half-full perspective hinges on whether Canada would respond to U.S. tariffs with its own, hampering the Canadian sales of Arctic’s American competitors. Mr. Estill has spoken with members of Parliament about taking this retaliatory approach, should the situation escalate.
“None of this is good for consumers, because the lowest cost is the way it is right now,” he said.
Mr. Estill is already familiar with the chaotic policy environment under Mr. Trump. He’s also the owner and CEO of Danby, which sells and manufactures appliances in Canada and the U.S.
Under Mr. Trump’s watch, the U.S. brought in new tariffs on washing machines in 2018 to support the domestic industry. But like many of their competitors in the U.S. market, Danby imported their machines from overseas which meant they were subject to tariffs. Those added costs were passed on to consumers, Mr. Estill said.
“If everybody has the same tax, then it’s kind of a level playing field, and nothing much changes except prices to consumers,” he said.
Mr. Estill said the uncertain policy landscape makes it difficult for business owners to invest in their operations, which can ripple through the economy.
“If I don’t put an addition on my plant, then the roofer doesn’t get paid, and then the roofer doesn’t go to the restaurant and spend their money, and then the waitress can’t go buy a bar fridge,” he said, referencing a Danby product. “That’s what the economy is, right?”
-Matt Lundy
AceTronic Industrial Controls
Recessions, trade wars and a financial crisis – Kim Thiara has seen it all.
Ms. Thiara is the owner of AceTronic Industrial Controls Inc., a 41-year-old Mississauga-based company that makes machinery and parts for manufacturers of plastic goods. Her customers make food packaging, car interiors and components, medical equipment and other products, most of which are exported to the U.S.
AceTronic’s sales – and those of its customers – would be affected by Mr. Trump’s promise to tax Canadian and Mexican imports at 25 per cent. This would drive up costs to U.S. manufacturers and consumers and make Canadian goods less competitive with those from such low-wage regions as Asia.
But ask Ms. Thiara about the prospect of the new tariff and she is sanguine. With fresh memories of Mr. Trump’s steel and aluminum tariffs, which were imposed during his first term, she expected another round of protectionism if he was elected. But she is optimistic the levy will not be as high as 25 per cent.
“This isn’t our first storm. And this, too, shall pass,” Ms. Thiara said. “I think he’s just kind of saying that now, and just preparing us for what may be coming down the road.”
She also doubts the U.S. will turn its back on a long-standing trade relationship in which the world’s largest economy benefits from a next-door partner that boasts rich resources and deep industrial knowledge.
AceTronic brought back parts of its manufacturing processes from Asia during the pandemic, part of a trend known as “nearshoring” that allows it to better control its operations even if some costs rise. Her U.S. trading partners have also done this – one calls it “friendshoring” – and show they value a culturally similar neighbour who is a trusted supplier.
“A lot of my customers this week were talking about the resources that Canada has to offer, the cobalt, the lithium, even hydro,” Ms. Thiara said. These resources include the southern Ontario automotive plastics sector in which AceTronic operates, she said.
“Trump is a businessman at the end of the day,” she said, “and I can’t see him disregarding that resource.”
-Eric Atkins
Brink Group of Companies
After 50 years in the softwood lumber business, this is one of the worst-case scenarios that John Brink has ever seen.
“I’ve dealt with everything from recessions through inflation to duties and all that combined at times, but we survived it all. Now we’ve got a whole combination of all the above,” he said.
Mr. Brink founded his lumber company in 1975 and now holds the title of CEO for the expanded Brink Group of Companies, which focuses on lumber, real estate, warehousing and media. The northern B.C.-based group employs around 400 people and exports more than 90 per cent of its product, mainly lumber, to the U.S.
If Mr. Trump implements a 25-per-cent tariff on all imports from Canada, Mr. Brink said the impact to the industry would be devastating. Already, many Canadian softwood lumber companies are being forced to pay a 14.4-per-cent duty on imports to the U.S. and with this tariff, he expects many of them could be put out of business. “There’s no question about that,” he said.
With additional tariffs, Mr. Brink predicts the cost of two-by-fours would soar, driving up U.S. home prices.
While some industries have reacted to Mr. Trump’s tariff promise with skepticism, Mr. Brink said he’s not taking it lightly. “If it is a comment and a commitment that has been made by the president-elect and his name is Trump, we can take it seriously,” he said.
However, he’s not worried about his own company’s survival. After 50 years in business, he said he has learned to keep a tight budget and an eye on the markets. But the inflation that would follow such a steep tariff, he said, is the most troubling part.
“The customers will pay,” he said.
-Pippa Norman