Canadian manufacturers turn away from U.S. amid Trump tariffs

Canadian manufacturers are targeting new markets for their trade as U.S. tariffs under President Donald Trump unsettle the trade links between the two countries.

A British Columbia firm that produces capsules and tablets for the drug industry is now looking for partners in Asia, while a steel component maker that has supplied U.S. buyers for 35 years is warning clients to brace for higher bills. Another company that sews mascot costumes for school and sports events has cut its prices in a bid to keep American orders from slipping away, as reported by Reuters.

These moves mark an abrupt shift in long‑standing practices built on easy access to the world’s largest consumer market.

Prime Minister Mark Carney, whose Liberal Party won last month after campaigning to “stand up to Trump,” will meet the president at the White House on Tuesday.

Carney has told voters the old trade relationship is finished, and the firms are treating that warning as a guide. Even if Ottawa and Washington step into a fresh agreement, executives say Trump’s unpredictable style means uncertainty will linger.

“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 U.S. partner,” said Mike Chisholm, who advises exporters. “Owners want stability, banks want stability, private equity funds want stability. They are just going to be very, very careful.”

Canada has long relied on the United States for about 75 % of its exports and was among the first nations hit when Trump raised the tariff wall.

In March, the White House set a 25 % duty on all steel and aluminum entering the United States. Cars and parts that do not meet North American free‑trade rules face the same surcharge.

Government figures show the manufacturing sector ships 42 % of its output to the United States, and roughly 1.7 million Canadian jobs depend on that flow. White House spokesman Kush Desai bluntly said, “Canadian companies won’t have to worry at all about tariffs when Canada becomes our cherished 51st state.”

Canadian businesses are forced to pivot to other markets

PNP Pharmaceuticals, a contract producer in Richmond, British Columbia, has responded by scouting Asian markets. “We are now venturing into other markets as we see that we need to pivot,” said Alan Urmeneta, the firm’s partnership sourcing manager. He did not name specific countries.

LabelPak Printing Inc., also in British Columbia, buys packaging from Asia and resells it. The company now considers focusing solely on Canada and gradually trimming 15 % of its sales that come from the United States.

“If he gets mad … and decides to throw a 50 percent tariff on Canadian goods, it’s going to really put us out of the market,” founder Ken Gallie said. “We are going to put more emphasis on the Canadian business.”

Still, firms that built their businesses around U.S. demand cannot replace it overnight, especially the smaller players.

Canada’s economy is less than one‑tenth the size of its neighbor’s, and sending goods across oceans costs more than trucking them over a border.

Chisholm says several of his clients are opening offices or hiring agents in Europe and Asia to dilute their U.S. exposure. “There are markets all over the world that we have free‑trade agreements with,” he said. “Where can I do business is what many are thinking.”

The tariff landscape is forcing hard talks with long‑time customers

“We are talking to these businesses and telling them, unfortunately, their government has chosen to have them pay more,” said James White, chief executive of Wellmaster, which makes steel parts for the energy and water‑supply sectors.

For Natalie Gaudreault, who runs Fusion TG in Montreal, the squeeze came from two sides. Her firm imports about 70% of its tool steel from China, machines it, and ships a fifth of the output to U.S. buyers. Ottawa imposed a 25 % duty on Chinese steel in October.

Trump added his own 25 % charge soon after. Once other taxes are counted, Gaudreault says her product cost in the United States will more than double. “I am not going to absorb the cost. I have to charge it to them,” she said, adding that first‑quarter sales fell one‑third.

Some suppliers are even reopening contracts to include tariff‑sharing clauses, a step that can harm trust, said Clifford Sosnow, partner at law firm Fasken. “It’s a hot knife through butter,” he warned. “It doesn’t work without creating damage.”

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