Winners and losers: experts say some industries face downside from tariffs, while others could benefit

Experts say U.S. tariffs will have a significant impact on the Canadian economy, potentially triggering a recession, but certain industries like retail and tourism could benefit while others like automotive and manufacturing could see a more significant downside.

On Wednesday U.S. President Donald trump unveiled his “liberation day plan” to hit various nations tariffs.



Following the announcement, The Canadian Press reported that a White House Fact sheet said Canada and Mexico were exempt form new reciprocal tariffs. The sheet said goods imported under the existing trade deal would not face tariffs, while other nations would be subject to a 10 per cent baseline tariff. However, Trump says he plans to move forward with a 25 per cent tariff on all foreign made cars.

“I would go so far as to say that these tariffs can lead to general recession in the Canadian economy,” RSM Canada Economist Tu Nguyen said in an interview with BNNBloomberg.ca Wednesday. Despite the overall impact, Nguyen said some industries may benefit, especially those that can gain from widespread buy Canadian sentiment, which she expects will continue.

Additionally other firms may benefit from the removal of interprovincial trade barriers some of which have been in place for decades. Winner: Retail Nguyen said retail stores could see changes in consumer spending while certain retailers will benefit from continued buy Canadian trends. “We’ve seen supermarkets and grocery stores and stores in general are putting tags on products that are made in Canada, or products of Canada.

So I think the retail sector is going to see a pivot in consumer spending,” she said. Within retail, Canadian alcoholic beverages may benefit from things like the removal of American-made alcohol from shelves in the LCBO. However, Dobner said he doesn’t see buy local sentiment as something that will last, particularly for larger ticket items.

“While at this point there is a major increase in Canadian patriotism, this may wane, I would expect it to wane over time, and people will go back to their normal decision making,” he said. “However, it could be that on smaller items like groceries and all of that, if Canadians are now looking into buying more Canadian, they are exposed to the Canadian brands, the Canadian food items..

.that may create a shift that is more permanent.” Winner: Tourism Canada’s tourism industry is facing an “interesting dynamic,” according to Nguyen, as Canadians are cancelling trips to the U.

S. and instead choosing to travel within the county. She said the trend will “benefit Canadian domestic tourism.

” Meanwhile Nguyen said Americans are not cancelling their trips in response to ongoing trade tensions. “So, Americans are still going to Canada and still booking their travels to Canada. So I think we will see demand in Canadian travel, especially in the summer.

..the weaker Canadian dollar will also attract tourists that might choose Canada instead of other destinations,” she said.

Winner: Finance The finance sector is unlikely to see some of the negative effects that other industries are likely to experience, Nguyen said. “I think some might even benefit just from..

.there might be increased demand in changing regulations. Businesses might have to catch up on what they need to comply with the new rules, whether to realign the supply chain, or changing the banking just to just navigate around uncertainty,” she said.

Overall, Nguyen said service industries are “generally less impacted, especially finance.” However, she noted that a widespread recession will hurt all industries to some extent. Loser: Autos Canada’s automotive industry appears to be positioned to feel significant downside effects from U.

S. tariffs, Nguyen said. “Now businesses with very heavily integrated supply chains will also be hurt, and the most prominent example is auto manufacturing, where car parts cross the border daily, and each time they are subject to tariffs,” she said.

“Obviously that raises prices for cars quite a lot, and at higher prices, is very difficult for these auto manufacturers to operate, and some have even talked about shutting down entirely until the situation improves, or exemptions are put in place,” she said. Michael Dobner, a partner, PWC Canada, said in an interview with BNN Bloomberg Wednesday Canada’s industrial sector, and especially its automotive industry, are deeply integrated with U.S.

supply chains. “Their dependence on the U.S.

market is sometimes well over 90 per cent with not much ability at this point to pivot to other markets. Because in Canada, at least in the manufacturing sector, Canadian companies usually their advantage is in lower manufacturing cost, but we don’t hold in that sector much of the intellectual property,” he said. “So, our ability to pivot and diversify beyond the U.

S. is quite limited.” Derek Benedet, a portfolio manager at Purpose Investments , said in a statement to BNNBloomberg.

ca that automotive producers and parts suppliers are among the most at risk sectors. “Around 85 per cent of vehicles manufactured in Canada make their way into the U.S.

Whether these are deemed USMCA compliant and whether that makes a difference, we’ll have to wait and see. Other sectors that will be impacted are steel and aluminum producers as well as manufacturers that are export dependent,” he said. A 25 per cent tariff on all foreign-made automobiles would have a “big impact” on Canada’s industry, Dobner said.

“At the same time, our research suggests that it will have a big impact on the U.S. sector, the ability to replace Canadian parts and automotive but especially parts, is fairly limited on the U.

S. side,” he said. “Therefore, inevitably there will be price increases on the consumer side, in the U.

S., there will be less demand for some of the Canadian vehicles on the parts element they may not be able to replace Canadian parts, and therefore the Canadian part companies may pass most of that to the U.S.

consumer, at least in the short term.” Loser: Real estate Home prices in Canada were expected to go up this year, Nguyen noted, following flat prices for the past few years amid higher interest rates and inflation. “Now we are seeing interest rates coming down, which should make housing prices go up, but (that) hasn’t happened yet, and I think that’s because prospective buyers are worried about job security and the general anxiety about the economy and that’s preventing prospective homeowners from coming out and buying houses,” she said.

“I think that if we do see a recession happen, housing prices will not go up by as much, but lower interest rates (and) relatively low inflation should help the real estate market. Prices for construction might increase just because a lot of construction materials are subject to either tariff or retaliation.” In contrast, Nguyen said businesses that depend on exports are likely to feel negative impacts from tariffs.

“Businesses that rely heavily on exports to the U.S. will be the most impacted, because tariffs mean that Canadian exports to the U.

S. will be more expensive for American consumers, so the demand for those products will go down,” she said. Michael Dobner, a partner at PWC Canada, said in an interview with BNNBloomberg.

ca that while “nobody wins” some industries may fare better than others. Canadian perspectives and trade war coverage at BNNBloomberg.ca.