The Decibel - How three Canadian businesses have coped with Trump’s tariffs

Episode Date: December 9, 2025

The Canadian manufacturing sector has been having a hard time, which has been made worse by U.S. tariffs. The impact of these tariffs varies company to company. So a team of Report on Business journalists from The Globe spoke to several manufacturers to see how they’ve fared this past year.Matt Lundy, The Globe’s Economics Editor, speaks about how badly these companies have been hurt, what they’re doing to try to cope and whether federal government supports have been any help.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.

The trusty snowplow. These heavy-duty vehicles are fixtures on roadways across Canada in the winter. In a way, they're like an essential service for a northern country. And given their importance, it's perhaps unsurprising that we make some of them here. Arctic snowplows is a company based in London, Ontario, that does just that. Arctic snowplow is a smallish company, but we make snowplows from scratch. Like we take the metal, we cut it, we bend it, we fold it, we weld it, we coat it, and make completed snow plows. And the snow plows we make are the ones that landscapers use to plow, you know, the mall parking lot or multiple parking lots.

It's not a home plow and it's not a municipal plow. So it's not the ones that you see on the 401. Jim Estill is the owner of Arctic snow plows. We sell where there is snow. So we sell from west coast to east coast. into the Midwest, northern part of the United States as well, and of course, Canada. But U.S. President Donald Trump's tariffs have made things more complicated. When we ship snow plows to the United States, we pay a tariff.

At first there was a tariff on plows, then it came off the plows. Now there are plows are Kuzma, but we still pay a tariff on steel and aluminum. There's not much aluminum in a plow, but there's a lot of steel. This is just one of many companies dealing with the direct effects of the Trump administration's approach to trade with Canada. And today, we're going to talk about what these tariffs have meant on the ground for three Canadian manufacturers, including Arctic snowplows. The Globe's economics editor Matt Lundy, along with reporters Eric Atkins and Pippa Norman,

reached out to these businesses. Matt is on the show to tell us just how difficult it's been. I'm Cheryl Sutherland, and this is the decibel from the Globe and Mail. Hi, Matt. Thanks so much for coming on the show. Thank you for having me. So, Matt, I know most of your year has been trying to understand the effects of U.S. tariffs on Canada's economy. And specifically, you've been looking at the impact in the manufacturing sector.

Why did you want to look at manufacturers specifically? A big part of that is manufacturers are so reliant on the U.S. market. If you look at the auto sector, for instance, these are supply chains that got built over decades. And really without a U.S. customer, the industry would not look the way it is. That being said, on a broader scale, the manufacturing sector in Canada has been in sort of long-term secular decline for a while. So, like, at the turn of the century, 16% of our economic output was in manufacturing. Now that's down to less than 9%.

So this is an area where, you know, we still have 1.5 million people in Canada who work in manufacturing. That's down from like over 2 million at one point. it's this area of kind of constant decline, and there is this threat that the Trump tariffs are just going to make things even worse. Yeah, that's right. Because manufacturing is actually one of the hardest hit sectors when it comes to Trump's tariffs on Canada, and those tariffs do keep changing.

Can you remind us what tariffs are still in place that affect Canadian manufacturers? For sure. We could probably put it into three buckets. The first one is easy. About 85 to 90 percent of stuff we send to the U.S. like resources, those are not getting hit with tariffs. So about the rest of it, we have sectoral tariffs, so things on steel, aluminum, autos, copper, even kitchen cabinets. And those run from generally around 25 to 50%. And then there's also, you may have heard of like the so-called fentanyl tariffs, like the really early stuff that

Trump had announced. And right now that's at 35%. And those are for products that they don't meet the rules of origin in the North American trade agreement, maybe it's stuff that came over from China. We made a few tweaks to it and then we sent it down, but it's not considered like a compliant product and therefore it gets a 35% tax. But in the context of manufacturing, it's really those sectoral tariffs, stuff like steel and aluminum that we really care about. Okay. Yeah. So the Globe actually spoke to a number of companies last year when the tariffs were at the time just a threat to get a sense of what it was like on the ground. And we'll get into three of them in a minute. But first, can you tell me what these companies told you last year? Yeah. So there were a number

of reactions at the time. Again, these were threats. So people didn't necessarily know how serious to take them. One thing was a sense of betrayal. Like we've been doing business with the U.S. for this long. How dare they? That was something. Others wanted us to retaliate. If they're going to put these tariffs in, we got to hit back hard. And then another reaction that we heard a lot was just that, you know what, maybe this is all bluster. Cooler heads will prevail. The U.S. will realize they really need Canada. Of course, we know that's not quite how it played out. Yeah, so I guess like that was last year. And so this is this year and they probably absorbed this news now. And so when you were getting ready to go back and interview them again this fall, these companies,

what did you expect they would say? I thought that the situation would frankly be a lot better than we had imagined this spring. As the tariff policies were coming out early in 2025, it was a really chaotic time. And there were a lot of predictions about what would happen to the Canadian economy. Maybe we wind up in recession. And the reality is that things have gone a little bit better than that. Because of those big exemptions on tariffs, the Canadian economies had a bit of a rough go, but like we didn't wind up in recession, which is very good. we've sort of muddled through, I would say. And so I was expecting a lot of companies to say, you know what?

We really worried about things, but we're fine. We're not affected by the tariffs. In fact, when we spoke to manufacturing companies, turns out it's been a really, really rough year for them. Yeah. So I guess I'm understanding here is that like if you zoom out and look at the numbers, the numbers weren't showing the pain, right? But it's in fact that you did speak the companies and we're going to get into that. But these companies are saying a different story. Yeah.

Like in aggregate, things seem relatively okay. right now. But once you drill down into those affected sectors, that's where the pain is. So let's get into some of these companies and their experiences over the past year. Let's start with Arctic snow plows. This is a nearly 60-year-old company. And we heard a bit from the owner, Jim Estill, in the intro. What did he tell you about the impact of the tariffs on his business? It has been really tough on his business. He said that U.S. sales have gone down by about 40%. Wow. It's a pretty big hit. Yeah. And for him, it's not that there is necessarily a tariff on his product specifically.

It's the fact that he has a lot of steel in that product. So he needs to calculate how much steel is in this, what's the value of it, and then it's being assessed a 50% tariff when it crosses the border. So the example that he mentioned to me is that on a $10,000 heavy-duty snowplow, there's an extra $500 charge. That's what the tariff costs for it to cross the border. border. And so it's almost, it's $500 on a $10,000 plow. So it's a significant amount. And a company like ours, you don't make an extra $500 a plow. It's not like saying, oh, no problem. We'll just,

you know, make five, that's the difference between making money or not making money. It's maybe a simple thing to point out, but I think it's important to remind people just how the tariffs work, right? So this 50% tariff, this means that when it goes to the buyer, which is in the U.S. in this case, they're the ones paying the extra money. Yeah, in theory, that's how it works. But those U.S. customers may be coming to a Canadian company and saying, hey, can we get a bit of a deal on this or can you absorb it in some way so that we're not just dealing with this massive charge, right?

So, like, those are the things that are happening at the firm level that make this more complicated. Yeah, okay. So you just said that 40% of his U.S. sales are down. Do we know how much that represents for his overall sales? No, we don't. He did not want to disclose that. Okay.

How does Jim feel about that? the political response from Ottawa? I would say he was not that enthused with it. So when I spoke to him a year ago, he was the guy saying, we got to retaliate. And we did for a while. We actually did have a 25% tariff on U.S. snow plows coming into Canada. However, those are removed. Toward like late summer, a lot of our counter tariffs that we put on in the spring,

those started getting rolled back because the prime minister, wanted to revive trade talks or at least get things flowing again and he thought that maybe these were counterproductive also like tariffs would cost us too if we're bringing in stuff from the US that's going to be an added cost for Canadians that's going to result in higher inflation

so there's also like an economic argument there of course Jim Estill is not happy about that because he's saying I'm getting hit when I send something to the United States my US competitors can send stuff up here and they're not getting hit. We're at a competitive disadvantage selling into States, and there are no competitive disadvantage. It's the same as always selling into Canada.

The only advantages we end up with is patriotism, but companies are economic beings. Like, they still look at the price. It's not like, oh, buy Canadian at any price. Something we've been hearing a lot about is diversification, right? So why not try to sell the snow plows to other northern countries, like maybe like somewhere in Europe? For Jim, he said it's very complicated to do that for any number of reasons. I mean, he listed off like a dozen things to me, basically. One is just like doing business with the U.S. is kind of similar to doing business in Canada. We all speak the same language. Contracts are kind of similar. He can get someone into Buffalo on a sales pitch in 90 minutes, he told me. Whereas selling overseas, one, there's like the logistics and the cost of

getting these heavy-duty products over to Europe. And the second thing is, I want to make a sales call in Sweden. We don't speak Swedish. It's probably a $10,000 trip. If they have have a part, how much we're going to have to air freight it, like how, and look at the freight on plows. Plows weigh literally a ton. So the freight would kill us. And there's different regulations. There's the fact that the trucks might be different over there and his products might not totally fit that. So he can't just simply divert his products over there. It's way more complicated. This is something that Canada is trying to do. The prime minister said, we want to double non-U.S. exports over the next decade, but that is really tough to do.

And Jim's story totally fits in with that. Like, going after these new markets is a challenging thing. And you can see why having the richest country in the world just to the south of us, of course they had geared their businesses to the U.S. We'll be right back. Let's talk about the next company, Ultra Form Manufacturing. Tell us about this company and what the last year has been like for them. Yeah, Ultraform is this auto parts maker that is based in the northwest of Toronto.

They make small components that go into like fluid systems like brakes and cooling systems. They're like a parts maker for other auto parts makers. Okay. And this really speaks to like how North American trade has changed over time where like an auto part will create. across a border, like six times on the way to completion sometimes. It is traveling a lot. And they're part of that supply chain. And the past year has been really tough on them.

Their sales have gone down by 40%. And they also lost a $2 million contract with an American company. And so have they had to lay off people? They have laid off about half of their staff. It's a pretty small operation. They're around 40 people. And they said they're slowly bringing some of them back that their sales have recovered a bit. They're still down, something like 18%.

Let's talk about this third company. You spoke with a plastics company called Aestronic Industrial Controls. What did that business tell you about how tariffs have affected them? Yeah, so Aestronic is a supplier of equipment in plastics manufacturing. So companies that are making plastics for like cars, medical equipment, and that sort of thing. And for them, they were saying that it's been more of a recent issue for them, that all of the paperwork and drudgery surrounding tariffs has started to affect sales now. It wasn't necessarily an immediate thing, but it is just so hard to wade through all the complexities of this. Because they're looking at like how much copper, which is affected by tariffs, is in this part. What about other

products? Does it comply with the USMCA agreement and all of these different considerations? And it just creates this like whole compliance and legal and everything sort of quagmire. And sometimes they mentioned their tariffs that they're being assessed are not accurate. They got hit with a 200% tariff when they sent something to the U.S. And they were like, why? Wow. Yeah. So these are the issues that companies are dealing with.

So they got hit with a 200% tariff. What was the tariff supposed to be? She says 35%. Okay. That's a huge difference. Massive difference. Yeah. I mean, there's so many things there.

One, it's like you have to stay on top of everything. And this idea of 200% tariffs when it should have been 35, that sounds frustrating. And like you said, imagine a lot of paperwork, a nightmare. Like you really do have to stay on top of all this, like to make sure that, you know, everything is going through appropriately. Yeah. I think a lot of these companies probably took certain aspects of what was in their products

maybe for granted to some extent. It's like, how do I know the weight or the value of this small component within a bigger component, right? And this speaks to why the tariffs are different in the second Trump term than in his first. When you talk about the metals tariffs, now they are much more widely applied to all sorts of products. Before it was much more about raw products to help out steel and aluminum producers in the U.S. Now it's just like, if there's metal in it, there's an okay chance or a decent chance that it is getting hit with tariffs in some capacity. Okay.

And that gets really complicated. Something I heard actually was that it would be easier if a company kind of knew about a tariff and it didn't change. Of course, there's an impact. But like what's really hard for companies is like there's unsurricular. certainty, right? There's just changing all the time. And that makes it difficult for businesses to plan, for example. Is that kind of what you're hearing? Yeah, absolutely. So Jim had mentioned, for instance, that, like, they really need to think twice when they hire people now, but also that he wanted to put in addition onto their London manufacturing plant. But that's something that he's delayed as a result of this. And we do see this time and again. If you see, like, surveys from the Bank of Canada of businesses, they talk about hiring freezes a lot. They talk about, investment decisions being delayed or just completely scrapped. And those are the things that really have a big macro effect on the economy, right?

You want companies to be investing. You want them to be hiring. And companies don't have that confidence right now. So we talked about three companies here. How common are these stories? I think they are fairly common right now. Once you get out of those sort of exempt firms in a number of areas, particularly like natural resources, huge export for Canada. But yeah, if you are dealing with metals in some

capacity, you're having to take a hard look at whether you're getting hit with tariffs, specifically when it's like steel and aluminum. I bet if we went out to hundreds of manufacturers, we would hear a lot of similar stories to the ones that we did. Okay. So earlier Matt, you talked about how the macroeconomic picture is not showing a lot of pain in the economy from the tariffs, as in it's not showing up in the numbers. But as you've laid out, these companies are feeling it. So, like, what is the disconnect here? I would say, for one, the government is spending a fair bit, including, like, on the military,

that's starting to show up in the economic numbers a little bit. On something like aluminum, we've actually diversified our trade a little bit. We found it a little bit easier to send some of those things to Europe. There are other parts of the economy that are seemingly doing okay right now. For instance, the price of gold has been absolutely. Soaring. We need a whole episode about this. Exactly. And that has really benefited Canada's export numbers in recent months. So yeah, I mean, we have all these different cross currents. Some things are on the more positive side. Some like manufacturing are a little bit more negative. And it's kind of netted out to something that's a bit neutral. Certainly not as good as we would want, right? We would like to have much stronger economic growth than we currently have. But the sky is not falling. Okay. How did each of these companies try to cope with the extra costs and loss of U.S. customers that they've dealt with over the last year? Yeah. So, like, in the case of Arctic, for instance, they're really focusing on the domestic market.

They're not spending on marketing like they would previously in the U.S. And they are trying to go after municipal bids in Canada or, like, shoring up those Canadian consumers. In the case of ultraform, they're using a federal work sharing program that allows them, to retain staff at reduced hours, and then they use the employment insurance system to top up their salaries. So this has helped them avoid even more layoffs. We know from the numbers that hundreds of companies are using this program, and like tens of thousands of people are on work sharing programs.

So that's a really positive thing in this that it didn't result in even more layoffs. Okay. Is there more that these companies wish the government would do? Yes. In a word, yes. Always more, right? Yeah. Yeah, exactly.

So, I mean, there are some different government programs around there on loans, for instance, because there's definitely a financial crunch that companies are under. One thing that we've heard out of the lumber industry, for instance, is that they've struggled to get the financing quickly enough, and they just need the money faster. So that is one thing. The other is that companies really want by Canadian to work out, and they want there to to be rules and stipulations in place whereby they are favored in the sort of procurement process, let's say.

And again, that's like a really tough one because for some companies that are sourcing things, like they want the cheapest slash best product they can get. And sometimes they don't want to choose Canadian. Interesting, interesting. So Matt, just to end here, there is no end in sight for these tariffs. And with Trump, there's always a possibility for more. So how did these businesses feel about the future? There is a lot of concern there.

We are in the midst of a review of the North American trade deal and free trade as we know it could look very different. Trump may pursue bilateral deals. I think that's a pretty widely held assumption right now. And yeah, I mean, the U.S. market could become even tougher to sell to next year, depending on how this process goes. so there is a lot of concern out there. It sounds like there's more uncertainty ahead. It's been a year of uncertainty, and 2026 is going to be the same. Matt, thank you so much for coming on the show.

Thank you. That was Matt Lundy, the Globe's economics editor. That's it for today. I'm Cheryl Sutherland. Alyssa Wheeler joins us as our Brooke Forbes fellow and is her associate producer. Our producers are Madeline Wendley. White, Mihal Stein, and Ali Graham. David Crosby edits the show.

Adrian Chung is our senior producer, and Angela Pichenza is our executive editor. Thanks so much for listening, and I'll talk to you tomorrow.