Canadian businesses are once again considering whether to expand operations into the United States as former President Donald Trump threatens to impose a new wave of tariffs if he returns to the White House. The prospect of higher trade barriers has made U.S. expansion an urgent strategic question for firms that rely heavily on cross-border sales.
Trump has vowed to enact a 10% across-the-board tariff on all imports, with even steeper rates for Chinese goods. For Canadian exporters, especially in manufacturing and agriculture, such measures could sharply raise costs and erode competitiveness. Many are now weighing the costs and benefits of building or acquiring facilities south of the border.
The calculation is not new. During Trump's first term, his tariffs on steel and aluminum prompted some Canadian producers to set up U.S. operations. The current threat, however, is broader and could affect a wider range of industries. Companies in automotive parts, lumber, and processed foods are among those reportedly exploring options.
Proponents of expansion argue that having a physical presence in the U.S. would allow firms to bypass tariffs, maintain access to the world's largest consumer market, and reduce supply-chain disruptions. But the move carries significant financial and operational risks. Setting up a new plant costs millions, and hiring U.S. workers adds labor expenses.
Critics warn that rushing into expansion based on a political threat could backfire if the tariff policy does not materialize or is short-lived. They also point to the potential loss of Canadian jobs and investment, and the difficulty of reversing a decision once made.
For now, many businesses are in a wait-and-see mode, but the clock is ticking. Trump's campaign has signaled that tariff proposals could be enacted quickly if he wins. Analysts say firms need to have contingency plans ready, even if they do not act immediately.