NCR Now — Wednesday, September 9
The biggest shift today is that the Canada-U.S. fight is no longer just about tariffs. Washington is moving into outright import bans, government procurement restrictions and pressure on Canadian companies over where they manufacture. At the same time, the Middle East conflict has pushed oil above US$100.
1. This isn’t just a trade war anymore. Washington wants Canada’s factories too.
Canada’s counter-tariffs on $27.6 billion of U.S. imports took effect yesterday at rates of 15%, 25% and 50%.
Washington responded by announcing bans, effective September 29, on certain Canadian dairy products, alcoholic beverages and motorcycles, while also moving to exclude Canadian products from long-term U.S. government contracts.
Add Trump’s threat against Bombardier: produce more aircraft in America or potentially lose access to the U.S. market.
The central question for Canada is whether it can keep major industries in Canada when its largest customer can make market access conditional on moving production south. The implications extend well beyond aerospace to Ontario’s auto industry, steel and advanced manufacturing.
2. Bombardier may be the warning. Ontario auto could be next.
Bombardier is particularly revealing because the company isn’t simply “Canadian.” It has thousands of American employees and suppliers spread across dozens of states. Its U.S. operations include a significant presence in Wichita, Kansas.
Yet Washington is still pressuring it to shift production.
Ontario should be watching closely because Trump has already threatened 50% tariffs on Canadian vehicles and parts beginning January 1.
The issue is whether Trump’s tariffs are intended primarily to change Canadian policy or to change where Canadian factories are located. If GM, Ford or Stellantis can avoid tariffs by putting their next production line in Michigan instead of Ontario, that is a very different threat from simply making Canadian exports more expensive.
3. Canada and the U.S. are climbing the tariff ladder. Who knows how to get down?
Canada retaliates against U.S. tariffs. Washington retaliates against Canada’s retaliation. Canada then faces pressure to respond again.
Each government has to demonstrate that it won’t be bullied. Eventually, backing down becomes politically more difficult than escalating.
The unresolved issue is what an actual exit ramp could look like. What can Carney concede without appearing to surrender? What can Trump withdraw while claiming victory?
4. The most expensive part of the trade war may be what Canada never builds.
We count layoffs, exports and tariff revenue. But we don’t easily count the Ontario manufacturer that postpones an expansion because nobody knows what U.S. market access will look like next year, or the multinational that chooses Michigan rather than Ontario, or the company that doesn’t hire another 50 workers.
Canada’s tariff-remission program itself acknowledges the problem businesses face when U.S. inputs can’t reasonably be sourced domestically or elsewhere.
These delayed or cancelled investments may become some of the hardest trade-war losses to measure because they represent factories, expansions and jobs that never materialize.
International
5. $100 oil is good news for part of Canada. That’s the problem.
Brent crude moved above US$100 a barrel today as the U.S.-Iran conflict escalated dramatically. Iran says it attacked 10 ships near the Strait of Hormuz after U.S. forces sank five Iranian tankers. Roughly 10 million barrels per day of global oil supply is reportedly offline.
Canada has an unusual problem. Higher oil prices can mean more Alberta oil revenue, higher producer profits and more government revenue while simultaneously producing higher gasoline, diesel, transportation costs, grocery prices and inflation.
It also complicates the Bank of Canada’s job. A trade war can weaken growth while an oil shock pushes inflation upward.
6. When shipping lanes become battlefields, everyone pays.
A tanker carrying about two million barrels of Iraqi fuel oil was struck by a drone today, while maritime authorities reported several merchant vessels hit in the Gulf and Gulf of Oman.
The bigger issue is what happens when commercial shipping itself becomes a military target. Insurance rises, crews demand higher compensation, ships reroute, deliveries take longer and freight costs rise. Eventually those costs appear in consumer prices thousands of kilometres away.
7. Russia is talking peace while attacking Ukraine’s lifelines to Europe.
Russian drones struck a Ukraine-Moldova border crossing today, killing two civilians. Russia has recently targeted several border crossings as Ukraine becomes more dependent on overland trade because Russian attacks have disrupted Black Sea ports.
At the same time, Moscow says it hopes U.S.-mediated peace talks will resume soon.
Military pressure during negotiations can be intended to improve bargaining leverage, making the attacks on Ukraine’s trade routes important to understanding what Russia may be trying to achieve at the negotiating table.
A quieter Canadian development worth watching
8. Canada can’t build homes fast enough. What if we started manufacturing more of them?
Ottawa and Alberta announced plans this morning for at least 1,460 affordable housing units, backed by up to $220 million federally and $165 million provincially. At least 500 homes are targeted for modern construction methods, including factory-built and off-site construction.
The numbers themselves are only part of the issue. Canada’s housing shortage may also be a productivity problem.
Canada has spent years discussing housing through interest rates, zoning, immigration and land supply. Factory-built construction introduces another possibility: manufacturing homes rather than constructing almost everything individually on site.
About The Author
