'A very major impact': CFIB calls for all-hands-on-deck approach to U.S. tariff plans

Simon Gaudreault, CFIB chief economist, discusses the impact of U.S. tariffs on Canadian businesses with Alberta Primetime host Michael Higgins.

This interview has been edited for clarity and length.

Michael Higgins: Let's start on the Trump tariff threat. If the president elect follows through and it's as high as 25 per cent, how is this most likely to impact the small- and medium-sized businesses your organization represents?

Simon Gaudreault: This is going to be a very major impact, there's no question about it. 2023 Stats Can reports that out of the roughly 50,000 or so Canadian businesses that exported that year, 97 per cent were actually small- or medium-sized businesses and they represented 40 per cent of the value of exports. So in terms of trade, exports and imports, small- and medium-sized businesses from very different sectors and all across Canada have a very large stake in this situation.

MH: There are those who suggest this is Donald Trump's opening salvo to shake up trade dynamics. Need there be a political rush to action?

SG: I think at this stage it's probably important to understand that this is part of a negotiation. Canada has, sort of, been there during the first Trump presidency. Of course, this time is a bit different, the frame is different, but I think panic wouldn't help in this case.

We need to certainly take this very seriously, as CFIB has shared a few days ago in a statement, we need to make sure that we have a very strong team Canada and all hands on deck to address the situation. But at this stage, I think it's really important that we look at all of the different options, assess Canada's position, and make sure that we put all of the chances on our side in this potential negotiation.

It's good news to know that the Canadian government has already started the work, well before the election. Following a bit of the same playbook as they followed during the first Trump presidency, which is to meet with different levels of policy makers in the U.S., state governors that have perhaps a bigger stake in the U.S.-Canada trade for their state.

We must look also at a larger question, which is our competitiveness in Canada relative to the businesses in the U.S. because the Trump administration also has a very aggressive policy when it comes to corporate taxation and also cutting red tape.

It was urgent before the announcement of the tariffs, but it's even more urgent now to have a very strong plan to make business more competitive in Canada.

MH: If the team Canada approach isn't as solid as many hope, what are the consequences of political bickering between federal and provincial governments?

SG: There is no question that this is a very big piece of economic news, and the analogy that I sometimes use is based on this image that some of us have heard before, the six degrees of separation. You're only six people away from anywhere or anyone on the planet. In terms of the economy, we're probably only one or two or three businesses or workers away from the U.S. economy, because not only do we export a lot of stuff in the U.S., but a lot of businesses import also and are part of supply chains that are on both sides of the border.

So a lot of businesses, whether they import or export directly or not, because they may buy from another business that is more directly involved, pretty much everybody in the economy is going to be impacted directly or indirectly by this. So we must take this seriously and it has to be really at the top of the priorities list at the moment.

We're certainly hoping that, as I was mentioning earlier, this is a large part of this is part of a negotiation tactic, and that we will be able to come up with a response that will make sense and that will protect the Canadian economy and jobs and businesses.

MH: We have a GST holiday bill passing, we have a Canada Post strike that continues from a business perspective. Is one out weighing the other in terms of where your membership sits?

SG: It does pile on. We've just sent a survey to CFIB membership on both of these topics. Already 3,800 businesses from all across Canada responded. The feedback that we're hearing is that both are impacting them.

We were surprised by the lack of support for the GST measure. It seems that majority of businesses oppose it, and even when you look at the subgroup of businesses that actually sell goods that will be impacted by the GST holiday, the position is higher at 62 per cent.

The reason is it's going to be complicated to administer, there's little time to do it, and there's cost associated with programming and reprogramming the point of sales and so on. So businesses are looking, and we've been calling for some understanding from the CRA post-tax holiday, when we may find out that some have haven't collected everything, because it's so complicated to administer and the cost, we're looking for some sort of compensation.

For the Canada Post strike, I think this piles on top of everything else. A lot of businesses, especially in rural communities, do not have a ton of options and still rely very much on Canada Post, not just to ship parcels, but checks are still very much a payment method.