The Decibel - Canadian businesses prepare for long-haul trade war

Episode Date: August 25, 2026

After trade talks broke down between Ottawa and Washington, U.S. President Donald Trump implemented 50-per-cent tariffs on $28-billion dollars worth of Canadian goods. Over the weekend, Prime Minister Mark Carney vowed to retaliate with dollar-for-dollar countertariffs, which are set to take effect after Labour Day. On Monday, President Trump announced the U.S. would also be doubling its tariffs on Canadian auto parts and steel to 50 per cent come Jan. 1, 2027. As the trade war escalates and deepens, Canadian businesses — already struggling under existing levies — are bracing for even more pain as uncertainty becomes the norm. Today, the Globe’s capital markets reporter, Jameson Berkow, is here. He’ll tell us what he’s hearing from business leaders, how these new levies and countertariffs will impact Canada’s economy, and how businesses are preparing for a lengthy trade war. Questions? Comments? Ideas? Email us at [e-mail] Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

An attitude at the negotiation table that Canada is a subsidiary of the United States. The Canadian industry is going to be disadvantaged relative to American industry. That we're going to set up terms so that over time Canadian industry is going to face constant headwinds. That's not something we're going to accept. At a press conference on Monday, Prime Minister Mark Carney reiterated that Canada, could not accept a bad deal from the U.S. Trade talks between the two countries fell apart on Friday. There were some things we wouldn't do.

We were not prepared to compromise Canada's sovereignty or to undermine our key industries. On Saturday, the U.S. implemented 50% tariffs on $28 billion worth of Canadian goods. The Prime Minister vowed to fight back with dollar-for-dollar counter tariffs. And then on Monday, Trump announced he'd be increasing tariffs on Canadian auto parts and steel to 50% on January 1st. So the trade war is in full force. This means Canadian businesses already struggling under existing levies are going to have to brace for what looks like, at this point at least, more pain.

So how are business leaders feeling right now? Jameson Burko reports on capital markets for the globe. He's been spending time talking to leaders in different business sectors. And he's on the show today to tell us what he's learned. I'm Cheryl Sutherland, and this is the Deciple from the Globe and Mail. Hi, Jameson. Thanks so much for joining me today. Always happy to be here, Cheryl.

And just to stay off the bat, this is a fast-moving file. Lots of news happening on tariffs all the time now, apparently. So we're speaking at noon on Monday. So, Jameson, before we get into how business leaders in Canada are feeling right now, can you give us an overview and give us a sense of how much these new levies will impact our economy? Well, it's interesting, Cheryl, because it on the surface looks like it's just a tiny impact. Like there's a big focus on it. It's like, oh, 50%, but it's only on a small section of exports. About 5% of everything that we send to the U.S. gets hit with that number.

And then remember, that's an annual figure. So that would have to be in place for a year for that to actually happen. And so the overall impact is kind of diluted, but of course, that is really cold comfort. If you're, say, an electronics manufacturer in Ontario or an apparel maker in Quebec, then, you know, you're not going to be feeling very good right now. There's a significant impact. And what's new about these tariffs is the various other rounds were really for products that weren't affected by our existing free trade agreement. this time what the Trump White House has done is basically throw the free trade agreement out the window and say it doesn't matter whether or not it is under the free trade agreement. We're still going to tax it.

Levy it, tariff it, whatever you want to call it. It's, you know, Americans importing our products are going to have to pay. So the end result of that is a lot of small businesses are going to feel the squeeze this time. The Canadian Federation of Independent Business actually did a survey of little over 1,800 of their members. And one in four said they would be affected by these tariffs. And a third said they would lose at least half of their revenue as a result of this. Wow. Which is just unimaginable.

I mean, that's bankruptcy talk right there. So let's get into what you heard from business leaders. Before we do that, though, give me a sense of who you spoke to. Well, the very first person I called, actually, when I woke up and saw that everything had fallen apart, you know, because I went to bed Friday night thinking like, oh, there's going to be a deal. I'll make some calls tomorrow to see, you know, how. How unhappy you're happy. I'm not the same thing. You know, woke up to a global mail news alert on my phone, muttered a few expletives and immediately started making phone calls at like 7 in the morning. First person I called was a gentleman named Gordon Nixon, who is probably a familiar name to a lot of Canadians. He ran Royal Bank for over a decade in the early 2000s, as is the case for many of these, you know, high-powered executives. He sits on a bunch of boards now. So he's very plugged in at the highest levels of corporate Canada.

The reason I called him first is because the last time I spoke to him was in March of 2025 when we were first in this situation. And it was even more of a shocker because, you know, now we have the unfortunate experience of having been here before with the Trump White House, whereas now, or back then, I should say, it was entirely new and frightening. And he was unequivocal about this being a permanent scarring, a permanent change in the relationship between the United States and Canada. What he told me when I spoke to him the other day after this latest round is that this just reinforces that. The worst case scenario is more and more

escalation. And, you know, that's what hopefully they're trying to avoid. But whether it's avoidable is, you know, it's a $64,000 question to which I don't think anyone has the answer. In terms of the mood, I think he actually really exemplified it really well when, you know, he expressed a lot of hope that this is just kind of a very dramatic but temporary scenario and that there will be some movement. I know we actually just saw that headline that said the prime minister is not looking to come back to the table. So it may actually be more relevant to bring up another conversation I had, the head of the Canadian manufacturers and exporters, which is a big industry group that includes tons of, you know, as you might guess, manufacturers and people who export a lot of

goods that are, you know, physically made and produced in Canada. Dennis Darby is the CEO of that group. He actually called me while he was on the highway, so I had a, you know, a good driving conversation with him. And what honestly kind of shocked me was how I didn't even ask him about the, you know, how long do you think this is going to go on sort of question. And he just volunteered that, you know, doesn't look like this is going to be resolved anytime soon. He was taking that language from the Prime Minister Saturday morning when, you know, even the reporters in the room sort of picked up on it and said, you know, this sounds like this is Mark Carney at war. Yeah. And his tone was, I mean, I've certainly heard him speak many, many times. I'm a business reporter who, you know, I used to interview him when he was the head of the Bank of Canada. So I've, you know, go way back and listening to Mark Carney talk. I have never heard him straight up angry like he was. And that really tells us that, you know, this may not be a quick fix. Yeah. So you mentioned two people there. And I'm curious to know, you know, when you spoke to them where, what was their tone like?

Could you sense? Like, I know business people are usually kind of chill, I could say. But did you get a sense that they were feeling worried? You know, it's funny because like they were both phone calls, right? So like I couldn't see them. But it's, you know how you can sometimes hear someone's eyes roll? Yeah. Yeah, I do.

It's sort of like that sort of like that here we go again kind of an experience, right? where, you know, because leading up to Friday night, right, like there were all these reports about all the concessions that Canada was willing to offer the U.S. to get a deal over the finish line. And so I think there was already a lot of dissatisfaction. Like, they were already prepared to be unhappy. You know, it was a different level of unhappy that they ended up feeling. But I think there was certainly going to be a level of frustration because ultimately the deal, as we understand it, was on the table was essentially,

Canada giving up a lot and really getting, as our one of our columnist Tony Keller put it, you know, just less bad. You know, let me punch you in the face and in exchange I won't punch you again in the face kind of a deal. And that didn't obviously sit well with anybody in this country, but especially business leaders because while it does give them some certainty, certainty is only really valuable if the certain environment you're operating in gives you some kind of opportunity. And that was extremely limited based on the deal that was on the table, which is why there was a lot of sort of understanding of why the prime minister had to walk away and recall the negotiators, because it simply was untenable at that point. So of course,

the number of Canadian sectors were already struggling with existing U.S. levies. How does this deal falling through change or situations? So let's start with the manufacturing sector. What have you heard on that point. I think there was already a lot of sort of emergency plans in the background. That's what I gathered from speaking to Mr. Darby at CME. I think, you know, that's part of the reason I think he's sort of come to terms with the fact that they have to settle in for the long haul. Obviously, if we're going to grow industry and if we're doing it in a situation where we don't have as easy access to the U.S. market, we're going to have to become much more competitive. we're going to have to, industry and government or have to work together to invest because

where it is right now, Canada is at a severe disadvantage. But of course, the challenge is it's not so much the tariffs as it is the extended period of uncertainty in which we now find ourselves because in order for business leaders to make investments, you know, building a new factory, expanding a factory, hiring new people, they need to at least have some idea of what, you know, the supply and demand picture is going to look like, what our trading relationship is going to look like, even if it is, you know, with a massive caveat, a massive asterisk attached to it. But even that is very difficult right now. So I think the concern is that we are essentially going to see business investment and the, you know,

job creation and the, you know, wealth that then comes to everyday Canadians with jobs, comes essentially on a big pause while we sit and wait to see how long this goes on for. I mean, eventually people get used to it as they did, you know, shortly after the quote-unquote liberation day. I hate that expression, Liberation Day. But, you know, the term in which Trump put up the big board where he showed all these numbers that were all, you know, factually incorrect and ridiculous. But I think ultimately what the hope is and what I think a lot of business lead, are being resigned to is that Trump will only be in office for so long. And I think the sort of conclusion that people are reaching is anyone will be better than him in terms of he's simply not

predictable. Let's talk about steel. What did you hear from the point of view of people working in steel? Well, I should be absolutely clear because I had some incredible support in putting our coverage over the weekend together from Sophia Bertuzi and Olivia Grandi. And what they had heard from the United Steelworkers, that's the main union that represents, you know, several thousand steelworkers in Canada, was that it was just simply not a sustainable option. What was on the table what the U.S. had proposed was a quota of about four million tons of exports to the U.S. but even in that quota, they still wanted a 25% tariff, and then they would go back to the 50% tariff on top of that, which was just completely, you know, it would destroy the competitiveness of the industry in the long term because it would, you know, solidify the tariffs that have already been in place. It's important to remember when you're talking about the steel industry, this is not a new situation for them. They have been hit by these tariffs under, you know, Section 232 for a long time now. So it's been a struggle. for them and

it's especially challenging because there's a logical disconnect because steel is a really good, like with the auto industry, it's very directly integrated with the American economy, so it's this sort of act of self-harm that the Americans are doing by

imposing these tariffs, but with the steelmakers I think they were especially frustrated that there was no talk of really eliminating levies, and this is just part and parcel across the whole spectrum of conversation. And we even had one report that said that the deal that was on the table at the last minute, they interjected this aspect that said that

totally unilaterally, they could have just snap back those 50% tariffs back in place if they decided that they didn't like something that Canada was doing or if, you know, the Ontario Premier put out another ad with Ronald Reagan's voice or something, you know, that just irked the occupant of the White House. And so, you know, that's where a lot of the attribution is gone for when the prime minister said, you know, this deal called into question the reliability of any deal. If they're just going to put a clause in that says, by the way, we can break this whenever we want. What about the forestry sector? Because we know that sector has also struggled with softwood lumber, especially targeted. What have you heard there?

I think the term that my colleagues collected, and I thought this really encapsulated, was that they've very much become collateral damage, Cheryl, in all this, because, you know, the softwood lumber dispute, that goes back to, you know, when you and I were, suffice to say, without dating us, without dating us, saying that, you know, I'll just say it's been a long time that this has been going on, the softwood lumber dispute. So this just sort of reminds the American administration now that they have a problem with our lumber policies.

and so there was already that 232 levy and anti-dumping, countervailing duties. People can Google those terms if they like. But now we're going to see finished products, you know, wood and paper products that aren't just, you know, logs cut down and you were not talking about board feet or what have you that the forestry sector uses. We're talking about stuff that actually comes out of mills. We're talking about, you know, paper, these sort of big, big exports that we send could now get 50% tariffs. So a lot of it comes down to what sort of supports we're going to see from

the federal government on that. I know that the prime minister did promise that there would be because that's been a longstanding sort of need from the forestry sector. They've almost come to rely on these supports because, as I said, you know, the dispute has been going on for so long now that we've almost had to counteract that, even though it's worth pointing out, that every time this has gone to, you know, a tribunal or under what was previously NAFTA, the dispute resolution mechanism, they generally side with Canada. But of course, you know, logic and rationality clearly has no place in the current circumstance. We'll be right back.

Let's also talk about the auto sector, because there are additional levies Trump said could be coming there, right? Yes, in fact, that really speaks to just how fast and furious things are evolving, right? now, Cheryl, because I actually just saw that headline as we were, you know, sitting down to begin our conversation that Trump is threatening to raise the tariffs, essentially doubling them from the 25% they're at under, you know, his current big threat to 50% and that that would apply to cars, trucks, auto parts. It's worth noting that auto parts actually had been, you know, not previously been tariffed. And that's largely because there's a very deeply integrated supply chain for auto parts. you know, we actually have a lovely graphic on our website showing how many times a certain part will, you know, hop across the border before it actually ends up in a finished automobile. And it's certainly, you know, it's more than two or three times. But he says he's going to start tariffing auto parts on January 1st. Of course, the concern is that if we're still having this conversation by the end of this year, it means that there's been no resolution. But then again, I think it really does speak to the immense

pressure that Trump is under. And this could be optimistic for Canada, frankly, because remember, we've done several stories, in fact, about how there's various groups, various lobbyists, various power players, various politicians who are really getting tired of this tariff policy from the president. And they're putting pressure on him to just give it up. So there's on that side of the border the pressure to say, you know, stop this fight with Canada. And then on our side of the border. There's tons of political support for the prime minister to really keep the pressure on the White House, which is just adding to the pressure that's internal in the United States. So I think that's why we're seeing the White House right now lash out with these increased threats. But ultimately,

I think that's as bizarre as it sounds, kind of a good thing, because it shows that it's starting to get to him and eventually the threats are taking about as seriously as Trump's golf score. Is that too? Is that too? Yeah, okay. Not taking very seriously at all then. Okay. So Prime Minister Mark Carney said on Saturday that Ottawa would be providing further relief for these targeted sectors.

He said, quote, we will support these businesses for as long as it takes. In other words, beyond the life of the U.S. administration. And Otto was expected to lay out its tariff relief plan for businesses hurt by the latest round of U.S. levies on Canadian imports this week. So we will hear more about that soon. But I'm curious, Jameson, what have you heard from business leaders on that? Do they feel like that's sufficient? I think the big concern right now is that it's not really going to address the long-term issue of business investment that I was talking about. I think that was something that Dennis Darby pointed out to me, he said, you know, like it's great. These supports keep people on the payroll and keep people

from having to be laid off their jobs. And that, of course, is incredibly important and very necessary. But it's not going to help business leaders say, okay, let's invest a billion dollars and build this new plant. Let's hire a hundred new people. No amount of support from the federal government is going to give them comfort to make those kinds of decisions. And those are the kind of decisions that grow our economy that increase, you know, people's standard of living, allow people to, you know, pay for their child's education and save. And I know our colleague Matt Skace has been following this very closely so folks can look him up and his coverage for the latest. But I think that's kind of the mentality that there is this expectation that the government will keep the lights on, so to speak,

for businesses. But in terms of any sort of growth, that's going to have to essentially come from a broader resolution to this crisis. So Carney vowed dollar for dollar retaliation in response to the 50% tariffs that took effect on Saturday. And we've heard those counter tariffs would take effect on September 8th. How have you heard business leaders respond to that, Jameson? Like, are they supportive? It's complicated because we still don't really know the details, Cheryl. I think the goal, of course, is to try and inflict pain. And as I was talking about earlier, you know, generate some more feedback from inside the United States so that they can say, hey, now we're suffering too, and you, you know, President Trump need to end this.

So that's the purpose. And it's also worthwhile to point out that, you know, these tariffs are, of course, something that we all are going to pay. They're effectively a tax on things that we buy from the United States. But the hope is that we would find other sources and sort of disperse the pain and really just put the suffering on the American suppliers of those goods. But again, without really knowing exactly what goods are being targeted, it's a lot of speculation. But ultimately, there is an understanding that this is necessary. And while it may not be, you know, good for anybody, and I think, again, that's something that Gordon Nixon said, you know, that these tariffs and then it becomes this tit for tad and back and forth. And that doesn't

really help anybody. And that is absolutely true. But, you know, we were just talking about all these supports that Ottawa wanted to offer, and that is very expensive. So at the end of the day, what one of the benefits of these counter tariffs could be is they generate additional revenue. In fact, there was actually an estimate that the University of Calgary Economics, Professor Trevor Toom said, where he estimated that those tariffs would generate something in the neighborhood of a billion dollars every month in new tax revenue for the federal government, and that that money could in turn go towards helping fund some of the supports that we're still waiting to hear the details on. Are there any red lines that the business community has around how Ottawa responds

to the U.S.? I think there were some red lines that were crossed, frankly, and I think that's why we ended up walking away. You know, like the steel industry talking about that quota and, you know, having tariffs that are still in place. I know the auto industry, and we had done some very good reporting on this as well, saying that tariffs would only drop on passenger vehicles, but that they would still apply to things like pickup trucks and, you know, larger vehicles, which is actually, we make mostly those things in the Canadian auto sector. So it wouldn't actually give us as much relief as we expected. So those were absolutely red lines. There was also some reporting that we had done on the, and this just frankly baffles me why this even came up, but it did, apparently.

restrictions on French language and the support that we offer to, you know, Quebec and to the French Canadian community for, you know, their cultural programs and media creation and labels on products. And I could not fathom how any Canadian federal government could sign a deal that would deliver such a body blow to French Canada. And I think the business community, as much as they're, you know, much more focused on, you know, the economic state and the finances, they're generally very politically literate. And so they understand that, you know, you're going to put that in a deal. That deal's not getting done. Okay. So it sounds like that means that if they're going back to the negotiating table,

those are things that are kind of non-negotiables. Big if there, too. I think that's the real concern. And that's the question, I think, the two of us can't answer sitting here and now that we really need an answer to, which is, you know, what is it going to take to get the two sides talking again? And it seems like the only thing that will create that will be some kind of walk back, come down, you know, taco from the White House. Trump always chickens out. That thank you. Yeah. So as I hate to speak in acronyms, but I think ultimately that is the only real way forward here because with the rhetoric that we've gotten from Ottawa, you know, for, I think people would just not accept a come down from our side

at this point. I think there needs to be just continued pressure on the White House. And then, of course, you know, there's also this broad resigning that I've heard from, from multiple business leaders, which is, you know, he's only presidential until 2028. And 2028 is decades from now in terms of the amount of, you know, damage. Yeah, it's a long time. It's a very, it's a very, very long time, but I mean, it's an end point. It's something to point to and say there is an end date. It shows how I think business leaders have just gotten to the point where they've thrown their hands up, right? And so, you know, there's just no dealing with this administration. So we're going to do what we can. We're going to, you know, get by as best we can. And then hopefully the next one will be less mercurial,

I think, maybe is the diplomatic term. On that point, that kind of flows. into my final question for you, Jameson, is because it does sound like this trade war is kind of going to be for the long haul, right? So how are people and businesses adapting to the prospect of a long-term trade war and ongoing uncertainty? Well, there's been a big shift, Cheryl, for the last 18 months or so, ever since, you know, we were first targeted by Trump's tariffs to diversify trade, to find new supply chains. That takes time. But now, of course, course, people are really reinvigorated, I think, to get that done. And that is actually really interesting timing. And my colleague James Bradshaw has a story about the investment summit

that the prime minister is holding in Toronto next month. And the whole point of that is to try and get more international investment into Canada, essentially finding partners who are rational, predictable, reliable, people who, you know, we can actually work with and we can trust and who, you know, we can believe when they signed on the dotted line that they're going to keep their word. I think the way the prime minister said it when he was talking about previous deals with the Americans was, you know, it's almost like they were writing, they were signing it in pencil. So this is an opportunity, if you want to try and take a glass half full perspective here, for more businesses to find broader bases of suppliers, of customers.

These things do take years, as Dennis Darby pointed out to me. So it's certainly not a short-term solution. But as we've already seen, slowly but surely, you know, turning this ship of trade away from the United States, it is turning. And it is something that will hopefully, you know, avoid the iceberg before we crash into it. And even if we do, you know, get scratched up by some ice along the way, that is the mentality that I think is broadly held across the business community, which is we will find some way of adapting because the alternative of just rolling over is not an option. Jameson, thank you so much for coming on the show. I really appreciate it. It's my pleasure, Cheryl. That was Jameson Burko, the Globe's Capital Markets Reporter.

That's all for today. I'm Cheryl Sutherland. Allie Graham produced this episode. Our producers are Madeline White, Rachel Levy McGoughlin, and Mahal Stein. Our editor is David Crosby. Adrian Chung is our senior producer, and Angela Pichenza is our executive editor. Thanks so much for listening.