Which Sectors of the Canadian Economy Are Most Vulnerable to Trump’s Tariffs?

• Donald Trump surprised many on November 25 by declaring that he wanted to impose universal tariffs of 25% on imports from Canada and Mexico. His previous announcements suggested that 10% tariffs would be part of his first actions as president.
• With Trump set to take office on January 20, Canadian companies are rightly highly concerned. Some should be more worried than others.
• In this Economic Viewpoint, we analyze the potential impact of possible tariffs on different sectors of the Canadian economy. (See summary table.) This impact is weighted according to our estimate of the likelihood of tariffs being imposed on a given industry. For example, we believe that the energy and automotive sectors are likely to benefit from tariff exemptions, though there’s still a lot of uncertainty around that. But this is unlikely to be true for other sectors where Americans have access to alternative suppliers (both foreign and domestic).
• We conclude that the sectors likely to be most affected by potential tariffs are primary metals (including aluminum), food and beverage manufacturing, chemicals, machinery and aerospace. (See industries with a red dot in the summary table.) The wood, pulp and paper, non-ferrous metals and plastics industries could also be hit hard by tariffs. (See industries with a yellow dot in the summary table.) The transportation and wholesale trade sectors would also suffer significant indirect effects from potential tariffs, as would agriculture, fishing and forestry. Industries less exposed to trade should fare better, including many service sectors. However, they could still experience ripple effects of any tariff-induced economic slowdown.

This report discusses tariffs. To learn what tariffs are and how they work, check out this explainer External link..