The Free Press
In 1997, Darrin Smith, 58, founded JessEm Tool Company, a woodworking tools business named for his twin daughters, Jesse and Emily. Today, JessEm Tool operates out of an 85,000–square-foot facility in Moncton, New Brunswick, with 65 employees and an annual growth rate of 15–20 percent. According to Smith, the company’s sales are on track to hit $17 million this year—80 percent of it in the U.S.
At least that’s how it looked before President Donald Trump slapped a 25 percent across-the-board tariff on imports from Canada (oil and petroleum products will be hit with “only” a 10 percent levy), along with levies on Mexican and Chinese imports. Trump cited the “threat of illegal aliens and deadly drugs”—though fentanyl smuggled from Canada accounts for just a small amount of the U.S. supply.
“I survived the global financial crisis and the pandemic,” Smith told me after learning of Trump’s move, which will immediately raise prices for his American clients. “I don’t think my business can survive these tariffs.”
It’s hard to overstate the harm Trump-imposed tariffs could do to Canada. It shares with the United States the world’s longest undefended international border, stretching more than 5,500 miles, with two-thirds of Canadians living within 60 miles of it. This proximity—along with the two countries’ long-standing alliance—fuels one of the broadest and deepest trade relationships in the world, with nearly $2.7 billion in goods and services crossing the border daily in 2023.
Trevor Tombe, an economist at the University of Calgary who has modeled the impact of a 25 percent tariff on the Canadian economy, told me he sees “an economic hit to Canada that is roughly equivalent to your typical recession, resulting in a 2.6 percent drop in Canada’s GDP.”
Small businesses are especially at risk. In 2022, 81.8 percent of Canadian small business exports went to the United States. These companies are so dependent on cross-border trade that Trump’s 25 percent tariff, coupled with Canada’s retaliatory tariffs, will likely affect 82 percent of them, according to a survey by the Canadian Federation of Independent Business.
Not surprisingly, most Canadians are aghast at what Trump has done. There is a powerful sense that Canada has been betrayed by its oldest and most important ally, a neighbor to whom it is tied by history, language, and culture.
Hours after Trump’s tariff announcement, Canadian prime minister Justin Trudeau went on national television and gave one of the most impassioned speeches of his career—a high point, ironically, in a career that is already ending, because he has announced his intention to resign.
Canada had no choice but to impose retaliatory tariffs of 25 percent on more than $150 billion worth of American imports, Trudeau said. In a tone more sorrowful than angry, he acknowledged that Trump had legitimate concerns, such as fentanyl moving south across the border, while insisting that he would stand up for Canadian interests.
Other Canadians, meanwhile, skipped the sorrow and went straight to anger.
On Saturday night, fans booed the American national anthem at an NHL hockey game in Ottawa between the Senators and the Minnesota Wild. Across the ideological spectrum, Canadians are expressing renewed nationalist sentiment; many are urging fellow citizens to boycott American products.
On February 2, Doug Ford, the conservative premier of Ontario, Canada’s most populous province, announced that the province’s socialized liquor stores will remove all American products after the tariffs take effect Tuesday.
“Americans have to understand how hurt and frankly, how furious Canadians are,” Chrystia Freeland, Canada’s former finance minister who is running to replace Trudeau, said on CNN.
The simple fact, though, is that the U.S. economy is 10 times bigger than Canada’s, so there’s a limit to how much Canadian tariffs can dissuade Trump. In fact, pragmatic Canadian businesses are already considering heading south: “With these tariffs, we will either sell the business to a U.S. company or move our business there,” Darrin Smith told me.
Economic development officials in several U.S. states are lining up to lure small and midsize Canadian manufacturers.
Even before Trump announced the tariffs, Canadian firms were already eyeing possibilities in the U.S. Starting around Christmas, the percentage of Canadian companies considering relocation to Buffalo, just across the border from Toronto, doubled compared to the same period last year, according to Tom Kucharski, president and CEO of Invest Buffalo Niagara.
Take, for instance, Emma May, 53, founder and CEO of SophieGrace, a Canadian clothing brand with $8.4 million in sales last year. She told me that with a quarter of her sales coming from the U.S., she is one of those considering a move. To her, it is a simple matter of getting “behind the tariff wall,” she said.
“I still want to sell to my Canadian consumer who has supported my business from day one,” she told me, “but the American market is huge, and if there’s going to be tariffs and restrictions put on me, I’m going to look at how I get around that.”
To be sure, relocation is impossible for some. Peter Donnelly is president of Alberta-based Cancarb Ltd., a leading producer of thermal carbon black, a key ingredient in automotive tires and wiper blades. It operates a large industrial plant, the portability of which is restricted by Canadian regulations and sheer logistics.
Cancarb is the sole supplier to 300 U.S. customers, including major tire and rubber manufacturers. Those clients might not have an alternative in the short run, but the 25 percent tariff is a strong incentive to find a U.S.-based one—and if they do, Donnelly said, “it would be a loss of 20 percent of our sales volume.”
For his part, Darrin Smith is getting closer to leaving New Brunswick. Texas and Ohio have offered to pay his company’s moving expenses and a tax abatement on a new building lasting 15 years, he told me. He’s been talking to a potential partner in the Lone Star State and has scheduled meetings with state officials.
After Trump’s tariff announcement, Smith seemed distraught and anguished about where Canada is today. Smith considers himself a loyal Canadian. At the same time, he is determined to keep JessEm Tool alive, as he did during the financial crisis and the pandemic.
“Maybe it’s destiny,” he said. “I’m a patriot but it’s tough to be a patriot in Canada nowadays, that’s for sure.”
