Business
A program announced this week to help someCanadian businesses faced with expensive counter-tariffs might not be enough to entirely sparesome manufacturing firms from damage, say observers. And one such company in rural Manitoba is already feeling the bite.
Ottawa's temporary relief on counter-tariffs might not be enough, CEO says
Anis Heydari · CBC News
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A program announced this weekto help someCanadian businesses faced with expensive counter-tariffs might not be enough to entirely sparesome manufacturing firms from damage, say observers. And one such company in rural Manitoba is already feeling the bite.
Since the trade war with the U.S. erupted last month,PhiBer Manufacturing has been paying"tens of thousands of dollars a week" in tariffs, according to CEO Derek Friesen, for materials required to make itsfarm and crop care equipment, as the company has no accessible Canadian or non-American suppliers for some of itsmost critical parts.
"It's not something you can switch very quickly," said Friesen. His company, based in Crystal City, Man., has a facility just under 200 kilometres southwest of Winnipeg. While many of the components it uses are made in Canada, it must import large, plastic water tanks and other material from the U.S.
"There's really only one manufacturer that is doing that for us," he told CBC News, and finding a Canadian alternativewould likely take more than a year.
So it was "exciting," Friesensaid, when Ottawa on Tuesday announceda temporary exemption of those counter-tariffs forgoods used inCanadian manufacturing,food and beverage packaging or for imports used tosupport health care, public safety and national security.
The six-month exemption datesback to March 4,according to the Department of Finance. This is in addition to otherprograms that could allow some businesses to avoid tariffs on a case-by-case basis.
But forPhiBer, he says, the reprieve may not be long enough, becausethe core problem remainsunless the tariffs are lifted entirely. There's no way for him to quickly and affordably avoid tariffed U.S. products while still operating a manufacturing plant staffed by Canadians in rural Manitoba.
"There's just no options for us that I can do faster than 14 to 18 months," he said. "It kind of opened up a whole can of worms for us."
The company has already suspended production for a time and, like other manufacturers, is stillscrambling to make contingency plansuntil costs can be stabilized or lowered.
For some importers, the exemption "will make a huge difference," said Greg Timm, president and CEO of PCB Global Trade Management, a custom brokerage based in British Columbia.
"We've counted on our neighbour to the south to buy most of our products. I think now it's time that we look in other places and diversify our markets," he said.
Timm saysmany of his clients were relieved to hear they have extra time to work out what they'll do next.
Even before Donald Trump started laying tariffs, he saysthe paperwork for importers was "fairly complicated,"he said.
"There are rules of origin that have to be proven. There areevaluation processes and formulas that have to be determined...it's not for somebody that just tries to do that off the side of their desk on a napkin."
The trade war has made a complicated situation worse, for one of this clients in particular.
This client "made a contractual purchase for $8 million worth of machine parts," back in September."They were contractually obliged to buy this equipment," he said.
"Then the tariff environment hit. They are now trying to figure out how they are going to pay 25 per centor $2 millionin extra duty."
He says Ottawa's exemptions could help,but that federal officials would likely still expect that company to try to find non-tariffed, Canadian products for future transactions.
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It all makes for a cautious business environment, but Timmexpects Canadian companies to eventually make it through.
"Business will continue, Canadians will consume. We're going to still eat and we're still going to do things. So we just have to find a way to get through this," he said.
But for PhiBer, the uncertainty continues to weigh heavily on the owner's mind — even with a six-month pause.
"Most manufacturers have been pretty stressed," said Friesen.
"I think what's hard is it's so unpredictable."
ABOUT THE AUTHOR
Anis Heydari
Senior Reporter
Anis Heydari is a senior reporter covering business and economics for CBC News. Prior to that, he was on the founding team of CBC Radio's "The Cost of Living" and has also reported for NPR's "The Indicator from Planet Money." He's lived and worked in Edmonton, Edinburgh, southwestern Ontario and Toronto, and is currently based in Calgary. Email him at anis@cbc.ca.
With files from Laura MacNaughton
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