Following the return of Canadian negotiators and the enforcement of 50 percent U.S. tariffs, the Canadian business sector is evaluating the potential impact of these new levies.
Various business leaders exporting products such as plywood and wine are expressing concerns about the significant impact the tariffs will have on their trade with the United States.
Now, the focus shifts to the broader economic repercussions. Which industries will bear the brunt of the tariffs, and what implications will this have on Canadian employment? Here is a breakdown of the key details you should be aware of.
Estimated Half a Percentage Point GDP Reduction: BMO Analysis
The newly implemented 50 percent tariffs cover approximately $28 billion worth of Canadian exports to the U.S., representing about five percent of total exports to the U.S. according to BMO senior economist Robert Kavcic.
BMO’s assessment suggests that these tariffs could potentially diminish Canada’s GDP growth by half a percentage point. This decline is attributed to businesses being hesitant to make new investments due to the tariff uncertainties, which could impede economic expansion.
Kavcic noted that the timing of these tariffs is unfortunate as the Canadian economy was showing signs of recovery, with growth picking up notably in recent months.
Impact Concentrated in Specific Industries
Although the overall impact may seem moderate at a national level, certain industries facing concentrated tariffs will experience significant challenges.
While $28 billion may seem manageable, Kavcic highlighted that for small to medium-sized businesses in affected sectors, the U.S. market could essentially be lost due to the hefty tariffs.
An analysis of export data by CBC reveals that the electronics and electrical equipment sectors will face the most acute impact from these tariffs. In 2025, Canada exported over $4 billion worth of electronic equipment subject to the new tariffs.
Additional sectors like plastics, furniture, bedding, and lighting follow closely behind, with industrial machinery and paper products also in the mix. Notably, Ontario and Quebec are particularly vulnerable due to their significant manufacturing presence in these sectors.
British Columbia is also significantly affected, especially by paper and wood tariffs, as these newly tariffed items constitute more than 13 percent of the province’s total exports to the U.S., the highest rate among all provinces.
Disproportionate Impact on Smaller Enterprises
Besides major manufacturing sectors, smaller businesses exporting various consumer products like honey, candles, and hockey sticks are among those hit by the new tariffs.
Kavcic noted that these products are likely exported by smaller Canadian enterprises and could be easily substituted with American alternatives, potentially causing a significant impact on these smaller players with limited financial resources.
The Canadian Federation of Independent Business (CFIB) found that 40 percent of its members exporting to the U.S. produce goods affected by the tariffs.
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