Economic experts are warning that the trade tensions between Canada and the United States are set to drive up costs for consumers and businesses, affecting a wide range of products from smartphones and gaming consoles to artificial intelligence infrastructure.
Canada’s electronics exports to the U.S. totaled over $4 billion last year and are now subject to the new 50 per cent tariffs imposed by U.S. President Donald Trump. This includes specific electrical components like boards and controllers that represent a significant portion of the targeted exports.
Prime Minister Mark Carney has announced that Canada will reciprocate the U.S. tariffs dollar for dollar.
Industry insiders anticipate inevitable price hikes as the trade dispute intensifies, posing challenges for businesses on both sides of the border.
Carol McGlogan, the president of Electro-Federation Canada, which represents over 230 companies in Canada’s electrical and automation sector, expressed grave concerns about the impact of the 50 per cent tariffs. She highlighted that 90% of their exports go to the U.S. and emphasized that the increased costs would trickle down to various sectors like housing, education, and infrastructure.
Evan Light, an associate professor at the University of Toronto, noted that products like gaming consoles and cell phones have already been experiencing price increases due to chip shortages and supply chain disruptions. He predicts that the ongoing Canada-U.S. trade tensions will further drive up prices for these items.
Traffic to Canadian e-commerce marketplace Common Goods has surged 300 per cent since Canada-U.S. trade talks broke down, according to owner Valerie Crisp. She says the response shows continued interest in buying Canadian, even as consumers navigate the complexities of the new tariffs.
Andrew Bell, the chief product officer at Ottawa-based Kinaxis, a software provider for supply chain management, highlighted that many clients are already exploring new supplier options in response to the tariffs. He emphasized that the ultimate impact of the tariffs would be felt by consumers through increased product prices.
Will tariffs slow AI adoption?
Bloomberg News recently reported that Nvidia, a leading tech company, has alerted customers about potential price hikes of up to 15% for its artificial intelligence chips.
“Supply chain disruptions, including tariffs, can lead to cost escalations for components,” Bell explained. “This trend is evident not only in our industry but also in companies like Nvidia.”
Professor Light raised concerns about the long-term effects of rising prices on AI adoption, suggesting that the increased expenses in both the U.S. and Canada might prompt a reassessment of investments in AI technologies.