Canada warns Trump tariffs raise business investment costs

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Canada warns tariffs raise costs

Highlights

Canada's ambassador Mark Wiseman says uncertainty from Trump tariffs is raising capital costs and deterring companies from investing in new plants and R&D.
U.S. customs duties on Canadian imports soared from $400 million in 2024 to $10 billion in 2025 as both countries negotiate tariff reductions on steel and automobiles.
A New York Fed study finds 90% of tariff costs are passed to U.S. importers and a quarter eventually impact consumer prices, reinforcing inflation concerns into 2027.

Tariff uncertainty weighs on investment planning

As reported by CNBC, Canada’s ambassador to the U.S., Mark Wiseman, says uncertainty around President Donald Trump’s tariffs is increasing the cost of capital and discouraging businesses from expanding. Speaking at the B20 summit in Washington, hosted by the U.S. Chamber of Commerce, Wiseman says companies are more likely to proceed with spending on new plants, ships and R&D when trade conditions are more predictable.

Washington and Ottawa are still trying to resolve a tariff dispute affecting one of the U.S.’s largest trading relationships. The two countries exchange roughly $570 billion in goods during the first nine months of 2026, according to U.S. Census Bureau data, up from the same period in 2025 but below the comparable stretch of the previous three years.

U.S. customs duties calculated on imports from Canada reach $10 billion in 2025, compared with $400 million in 2024, according to the Congressional Research Service. The two governments have resumed negotiations after talks collapse in August, with discussions focused on lowering tariffs on Canadian steel and automobiles, while Trump has imposed duties of up to 50% on some Canadian products and triggered retaliatory measures on billions of dollars in U.S. exports.

Wiseman is calling for the removal of tariffs imposed under Sections 232 and 338 of U.S. trade law, saying a settlement would give businesses the clarity needed for long-term investment decisions. Prime Minister Mark Carney says the Trump administration remains Canada’s main negotiating counterpart, even as political pressure in Washington shifts after the midterm elections.

Inflation concerns and broader business impact

An October study by New York Fed researchers finds that nearly 90% of tariff costs are passed on to U.S. importers, with about a quarter of tariff increases eventually flowing into consumer goods prices. The study also points to further price pressure in 2027, reinforcing concerns about the wider economic cost of the trade dispute.

Those findings coincide with Labor Department data showing consumer prices rise 0.4% in October, a stronger-than-expected increase that adds to inflation worries. Trump continues to defend the tariffs as protection for U.S. manufacturers and workers, while accusing Canada of maintaining discriminatory trade practices that hurt U.S. exporters.

Canada is also trying to use its lower effective business tax rate to attract investment as tariff tensions continue. At the same B20 panel, Germany’s ambassador to the U.S., Jens Hanefeld, says companies can adapt to tariffs more easily than to constantly changing rules, which force businesses to spend more on legal advice.

France’s ambassador to the U.S., Aurelien Lechevallier, also calls for greater cooperation on artificial intelligence and energy instead of prolonged trade disputes. The comments from European diplomats suggest concern is spreading beyond North America as companies weigh the cost of policy volatility across major markets.

We have also discussed the broader context around U.S. toy prices, which rose as tariffs and energy-linked costs pushed up retail shelves.

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