‘We have to get ready for the worst’ Manitoba business leaders draw up defence plans but still face many unknowns after months of Trump's tariffs talk, threats By: Gabrielle Piché, Martin Cash and Aaron Epp Posted: 5:24 PM CST Friday, Jan. 17, 2025

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U.S. president-elect Donald Trump hasn’t yet retaken the Oval Office but has already caused of flurry of disruption within Manitoba’s — and Canada’s — business world.

Business leaders, associations and government officials have been meeting across the country, asking the same questions: how legitimate is Trump’s threat of a 25 per cent blanket tariff on Canadian imports? What do we do if those tariffs appear?

Trump first made the comment in November. He’s doubled down since, proposing tariffs as a driver for improved border security, then saying he’d use economic force to acquire Canada as a 51st state.

Nearly $42 billion worth of goods trade between Manitoba and the United States annually, according to data from the Canadian Chamber of Commerce.

Almost 1,800 Manitoba companies export to the U.S; 63,179 jobs are supported by those exports.

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“The concern is making sure that we’ve got a consistent voice from Manitoba, in terms of what steps we’re going to take,” said Chuck Davidson, president of the Manitoba Chambers of Commerce. “At the end of the day, everyone sees this as a lose-lose situation.”

Premier Wab Kinew was in North Dakota on Jan. 6 representing Manitoba’s economic interests. He convened with fellow premiers in Ottawa on Jan. 15, days away from Trump’s Jan. 20 inauguration.

Vehicle manufacturers, consumer goods creators and the oil and natural gas industry stand to be “disproportionately affected,” said Andrew DiCapua, a senior economist for the Canadian Chamber of Commerce.

Chemicals, fats and oils, mineral products, machinery and transportation items are among Manitoba’s top exports to the United States.

But the proposed tariff is broad — and the economic impact would be drastic, DiCapua noted.

The Free Press delved into three of Manitoba’s export-heavy industries — agriculture and agri-food, manufacturing and mining — to find how they’re preparing for Trump’s threatened tariff.

Manufacturing uncertainty

Palliser Furniture is looking both south and north with trepidation.

The Winnipeg manufacturer exports its goods to the United States from Manitoba and Mexico. Trump has threatened 25 per cent tariffs on goods crossing from both borders.

“We hope that it’s just threats,” said Peter Tielmann, president of Palliser Furniture. “Having said that, we have to get ready for the worst.”

Tielmann spent time in Toronto meeting Canadian government and business leaders in the week leading up to Trump’s inauguration. Tariffs — and what to do should they materialize — dominated the conversation.

Roughly 60 per cent of Palliser Furniture’s Manitoba-made goods are shipped to the United States, Tielmann ballparked. In Mexico — the company’s larger site — some 70 per cent of items travel north.

Palliser Furniture is contemplating expanding its manufacturing presence in the United States.

“We think by transferring some manufacturing goods to the U.S. and finishing them off there, we may be able to reduce the … impact of the tariffs,” Tielmann said.

His company isn’t alone. Nearly half of Canada’s manufacturers plan to shift some production to the United States if tariffs are imposed, a Canadian Manufacturers & Exporters membership survey found.

Forty-eight per cent of the 311 respondents said they’d freeze hiring or lay off staff should tariffs come; 46 per cent projected postponed or cancelled investments.

Terry Shaw, CME regional vice-president for the Prairies, said he’s had conversations with members who are expediting shipments to the U.S. ahead of potential tariffs. “Folks are doing what they can right now.”

Palliser Furniture hasn’t done much shipment acceleration; it has finite capacity, Tielmann said. Speeding up would require hiring and training more workers, which takes time.

“We’re maximizing all capacity, we make as much as we can,” Tielmann said.

Still, 30 per cent of Canadian manufacturers have been accelerating U.S. shipments, the CME survey found. Thirty per cent have delayed investments, 22 per cent are freezing hiring and 28 per cent are searching for alternative markets.

Manitoba alone counts 2,399 manufacturing establishments. The industry accounted for 10 per cent of the province’s GDP in 2022 and pulled $26.4 billion in sales in 2023.

Two years ago, it counted $14.8 billion in exports.

“We need to continue reminding everybody that the impacts will not be felt solely on one side of the border,” Shaw said of a blanket 25 per cent tariff.

Decreased manufacturing exports will negatively affect the trucking industry and will tighten the wallets of thousands of manufacturers, leading to less spending on retail, restaurants and other sites reliant on disposable income, Shaw outlined.

Earlier this week, he contacted the province’s business deputy minister and inquired about regular tariff updates. Shaw envisions daily or weekly convenings with members to keep them abreast of developments.

“It certainly reminds me a touch of what we saw during COVID,” Shaw said.

Agriculture apprehension

At Kroeker Farms, staff have been reassuring U.S. customers that if Trump imposes a 25 per cent tariff on goods from Canada, the Winkler-based company will continue to ship its products as usual.

“We’ve spent many years and lots of hard work in finding great customers across North America and the last thing we’ll do is give up those customers,” CEO and president Wayne Rempel said.

With a staff that ranges between 250 and 320, Kroeker Farms is one of Canada’s leading potato producers and Manitoba’s largest grower of organic potatoes. The company exports more than 75 million pounds to the U.S. annually.

“My optimistic side tells us that (a tariff is) not going to be applied to fruits and vegetables because reciprocal treatment would be very punitive for the U.S.,” Rempel said. “It would be the last thing I think that they will want to tax.”

Still, the prospect of a tariff “does scare us a little bit,” he said.

That trepidation is being felt across Manitoba’s agriculture and agri-food sector, which is a significant economic driver for the province. The U.S. is the top export market for the keystone province’s agri-food products. In 2023, Manitoba shipped more than $4.5 billion in agri-food products to the States.

“People don’t want anything to impact the free flow of goods,” said Colin Hornby, manager of communications and stakeholder relations at Keystone Agricultural Producers.

“We just want to see a ‘Team Canada’ approach and make sure that we’re all sort of talking about the impact of anything that could negatively affect those cross-border trade activities.”

Founded in 1984, Keystone has approximately 4,600 farmer members who produce a variety of agricultural products. The organization is also supported by 20 commodity group members.

Keystone has been trying to anticipate what might happen once Trump takes office.

Hornby and Keystone president Jill Verwey were in Iowa at the beginning of the month as part of a Canadian delegation at the Ag Chairs Summit organized by State Agriculture and Rural Leaders.

“We can’t wait for bad stuff to happen to have a plan.”–Manitoba Pork GM Cam Dahl

The delegation spoke with American legislators and people from the U.S. ag industry about the shared issues they face.

“Those conversations were very positive when we spoke to state-level legislators and the American industry,” Hornby said. “They all understand the importance of the Canada-U.S. trade relationship and that it’s foundational to the success of our economies.”

In a recent interview with Pembina Valley Online, Cam Dahl, general manager at Manitoba Pork, said trade relations with the U.S. remain a top priority for the province’s pork industry in 2025.

“We ship about three million pigs to the U.S. each year and export 90 per cent of the eight million pigs we raise annually as pork or live animals,” Dahl said.

“Protectionist rhetoric and potential tariffs from the incoming U.S. administration heighten the need for strategic outreach and collaboration. We can’t wait for bad stuff to happen to have a plan.”

According to Rempel, Prime Minister Justin Trudeau’s response to Trump’s threats has been “weak” and is just as problematic as the threats themselves.

“Our very weak response … is not helping the situation,” Rempel said. “Strong leadership would do a lot for us right now.”

Keystone has been in daily contact with the provincial government, Hornby said, to provide feedback and let them know what producers are thinking.

Having the ear of the government is helpful, he added.

“The jobs that we create from agriculture are massive and anything that affects the ability for farmers to be successful is ultimately bad for Manitoba as a whole,” Hornby said. “(It’s) one of the largest industries we have here in the province.”

Mining misgiving

Despite the fact there are only four producing mines in Manitoba (including a small potash operation), mineral products are the province’s largest export segment, worth about $5 billion per year.

Whereas 70 per cent of the province’s international exports go to the U.S., that number is likely a lot smaller for the mineral sector. Having said that, the process of extracting and processing the raw material and then using it as an input in manufacturing makes tracking the final destination almost impossible.

For instance, Candace Brûlé, a spokesperson for HudBay Minerals Inc., a company that has been operating active mines in Manitoba for almost 100 years, says it does not expect its Manitoba operations will be negatively impacted by U.S. tariffs.

“It would be a mistake to say we won’t be negatively affected by tariffs.”–John Morris, co-director of the Mining Association of Manitoba

“Our production in Manitoba is not sold to smelting customers in the U.S.,” she said. “A majority of the production is sold domestically to Canadian smelters and the Canadian mint.”

Those other Canadian smelters may well export to the U.S.

John Morris, co-director of the Mining Association of Manitoba, said the province’s mining sector is fortunate to have diverse markets for its products shipping to Europe, Asia, elsewhere in Canada, along with the U.S.

“It would be a mistake to say we won’t be negatively affected by tariffs,” he said.

“We do some exports to the U.S. and we don’t want to see any tariffs. They are inherently bad across the board. That said, the bit of good news from our trade perspective is that we do have international exports that go into markets around the world.”

Although officials from Vale were not available to comment, the Brazil-based corporation that owns the Thompson nickel mining operation ships most of its concentrate to Sudbury, Ont., where it is smelted.

There are probably scenarios where the nickel is shipped to overseas parts manufacturers then shipped back to the U.S. for final assembly in an original equipment manufacturer’s plant.

In addition to HudBay, Vale and the potash mine, Tantalum Mining Corporation of Canada, Ltd. (Tanco), has been mining commercial-grade cesium for more than 50 years near Lac du Bonnet.

It’s owned by Sinomine Resource Group Co. Ltd., a Beijing-based company with mines and mineral processing operations around the world.

Cesium is a rare earth metal used in all sorts of critical industrial and medical applications. As well as being one of the few sources of cesium in the world, Tanco is also one of only two mining lithium in Canada.

The company says it produces cesium for the North American market. While no company official was available to talk, it’s not hard to imagine its customers will pay the tariff and continue to accept the product because they would likely not have any other option for the supply of cesium.

When it comes to the prospects of tariffs causing investment to cool off, it seems like it will not have that effect on the mining business.

Just this week, Alamos Gold Inc. told its shareholders and the markets it will go ahead with the development of two open pit mines near Lynn Lake, committing to investing about $1 billion over the next three years to build the northern Manitoba operation.

“What does that tell you?” said Morris.

Relationship stress test

Tariffs against Canada are not new for Trump.

In 2018, the then-U.S. president imposed tariffs on Canadian steel and aluminum. The sector’s exports and sales dropped upon implementation.

A blanket 25 per cent tariff would have a “much more consequential” ripple effect nationally, said DiCapua from the Canadian Chamber of Commerce.

The chamber expects such a tariff would cost Canadian households an average of $1,900 annually and US$1,300 per American household.

Canadian businesses and organizations have emphasized a united front. On Thursday, Prime Minister Trudeau launched the Council on Canada-U.S. Relations, comprised of business and policy leaders.

A voluntary Canada U.S. Trade Council launched Jan. 10. Industry groups like the Business Council of Canada and the Canadian Chamber of Commerce have melded with labour organizations and sectors including steel, aluminum, agri-food and chemistry.

Premier Kinew has announced plans to open a Manitoba trade office in Washington, D.C., this year.

“This is the top issue on the plates of every organization, every level of government in Canada right now,” said Davidson from the Manitoba Chambers of Commerce.

He’s heard concern from Manitoba businesses — they’re looking for a consistent message from Canada. Many have connected with their American partners and emphasized the importance of the relationship.

“What we’re hearing from a lot of our counterparts in the United States, they recognize the importance of that relationship with Canada,” Davidson said.

“Before we go down that path of putting tariffs on each other, let’s really understand the importance the relationship has on both economies.”

An Angus Reid Institute poll found half of Americans opposed a 25 per cent tariff on Canada. The proposed tariff was more popular among Trump supporters: 53 per cent supported the measure.

Meanwhile, three in every five Canadians believe if Trump imposes tariffs, Canada should do the same, the Angus Reid Institute found.

Daily trade between Canada and the United States is valued at $3.6 billion.

martin.cash@winnipegfreepress.com

aaron.epp@winnipegfreepress.com

gabrielle.piche@winnipegfreepress.com

Gabrielle Piché
Reporter

Gabby is a big fan of people, writing and learning. She joined the Free Press business beat in 2021.

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Aaron Epp
Reporter

Aaron Epp reports on business for the Free Press.

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