As Trump tariffs sink in, Canadian firms pivot from US to new markets

A manufacturer of capsules and tablets for the pharmaceuticals industry is scouting Asia for new partners. A steel component maker, with a client base in the United States stretching back 35 years, is telling customers to expect to pay higher prices.

Another company, that produces mascot costumes for sporting or school events, is lowering its prices so as not to lose American customers. President Donald Trump’s tariff war - and his repeated threats to annex Canada - are upending decades of close trade ties between the two North American neighbors, and prompting many small-scale Canadian manufacturing firms to revise their long-term business strategies. Prime Minister Mark Carney, who led the Liberal party to victory last month by campaigning to stand up to Trump, is scheduled to meet the US President at the White House on Tuesday.

He has repeatedly said the old relationship with the United States is over. Even if the US forges a new trade agreement with Canada, Trump’s erratic policy and the uncertainty of doing business with the US will persist, according to interviews with more than a dozen companies, advisors, trade lawyers and associations.

“If you are a smart, savvy business person, you are not going to jump right back into another arrangement where you are totally reliant on a US partner,” said Mike Chisholm, who runs a consultancy for Canadian exporters.

“Owners want stability, banks want stability, private equity funds want stability,” he said. “They are just going to be very, very careful.” Canada, which has historically depended on US markets for 75% of its exports, was one of the first countries hit by Trump’s tariffs.

Trump has justified the tariffs as a way to hold Canada accountable for fentanyl entering the US - although data shows less than 1% of all seizures come from across the Canadian border. In March, Trump imposed a 25% tariff on all steel and aluminium imports coming into the US and then slapped another 25% tariff on cars and parts that did not comply with a North American free trade agreement, although he stopped short of a broad reciprocal tariff imposed on some countries in early April.

Experts have said that adding reciprocal tariffs on Canada would have spiked bankruptcies in the manufacturing sector.

The manufacturing sector ships 42% of its output into the U.S and 41% of its roughly 1.7 million workers rely on US imports, according to government figures. Carney’s office declined to provide fresh comment on the impact of tariffs.

When asked for comment, White House spokesman Kush Desai said: “Canadian companies won’t have to worry at all about tariffs when Canada becomes our cherished 51st state.” ‘WE NEED TO PIVOT’ PNP Pharmaceuticals, a manufacturer for drug makers in British Columbia, responded to Trump’s tariff moves by trying to find customers in Asia, Alan Urmeneta, Partnership Sourcing Manager, said in an interview.

“We are now venturing into other markets as we see that we need to pivot,” Urmeneta said. He declined to identify specific countries.

Agencies