Winnipeg Free Press

Winnipeg Free Press (Newspaper) - February 3, 2025, Winnipeg, Manitoba A2 ● WINNIPEGFREEPRESS.COM S TANDING in an aisle of the Grant Park liquor mart on Saturday night, I found myself in the grips of a dilemma. I took a long, hard look at a 2023 unoaked Napa Valley Chardonnay and wondered if — given U.S. President Donald Trump’s impending tariff campaign — I should put it back on the shelf in a quiet act of protest. It was pretty clear at that moment that most provinces were likely going to pull American booze from gov- ernment liquor stores. On Sunday, Manitoba Premier Wab Kinew added this province to the list. Could I, simply by turning my back on a bottle of chardonnay, help Cana- da’s cause in an unprecedented trade war? Turns out that we Canadians buy a lot of American alcohol. Ontario, one of the largest single purchasers of alcohol in the world, each year sells about $1 billion in U.S. wine, beer and spirits. Even in tiny Manitoba, liquor marts and private wine stores sell roughly $80 million worth of American booze. If all prov- inces follow suit, it’s going to cause a lot of grief for a lot of U.S. wineries, breweries and distilleries. Of course, this is a war that is going to extend far beyond alcohol. Given that Trump is applying a blan- ket 25-per-cent tariff on all Canadian imports, this week should see a flurry of countervailing measures. Ottawa has already announced a 25-per-cent tariff on about $30 billion worth of various goods. Another $125-billion in tariffs will come later this week, along with support programs for Canadian businesses and workers. Even with these measures, winning a trade war with Trump is highly unlikely. Still, leaders like Kinew are clinging to the idea that doing some- thing is better than nothing. “Now that the fight is here, a fight that we did not ask for, we have to stick up for ourselves.” Kinew is not wrong, but neither is he being naive about the consequenc- es of returning fire at the Trump administration. Even in the best case scenarios, once tariffs and counter- vailing tariffs are in place, the value of currency and GDP in the countries involved will go down, while inflation and unemployment will be on an up- ward trajectory. It is that inescapable reality of a trade war that Kinew and other Cana- dian leaders hope will resonate with Trump. At some point, the theory is that even a leader as unpredictable as Trump will realize tariffs inflict near- ly as much damage on the economy of the country that enacts them as they do on the other countries involved. And that somehow, the economic stress caused by the tariffs and coun- tervailing tariffs will prompt Trump to back down. That’s what a rational person would do. But then again, we’re not dealing with a rational person. We find ourselves in the unenviable position of trying to preach logic to a man who has rejected conventional logic. Trump’s tariff plan ignores the established rules of both economics and mathematics. It is a strategy based on a hilariously erroneous theory, pumped full of deliberately errone- ous numbers, that promises totally unachievable results. It’s going to be very hard to scare someone into backing down if they simply won’t acknowledge the peril they are facing. Remarkably, there is actually some reason for optimism. Not that Trump will wake up and smell the economic theory of tariffs, but that he can be nudged into retreat. In fact, there are already some instances where he has backed down under acute domestic pressure. Take Trump’s executive order to cease all distribution of international aid for 90 days while funding pro- grams are reviewed. Although ending foreign aid is a core precept of the ultra-nationalist, anti-globalist MAGA warriors, it’s really unpopular with other constituencies. Like farmers. For nearly 100 years, the U.S. fed- eral government has paid American farmers to grow crops specifically to donate as humanitarian aid. Less food aid means less money flowing into the pockets of farmers. And that has already ramped up the heat on the Trump administration. Under pressure from members of congress, humanitarian groups and agricultural lobbies, U.S. Secretary of State Marco Rubio has already started back-tracking. Initially, Rubio had only exempted programs providing emergency food and military aid to Israel and Egypt. Since the executive order was signed, however, Rubio has approved waivers for programs that provide life-saving medicine, medical services, food and shelter. The smart money is that over the next year, Trump will find one or two smaller NGOs to punish, allowing the vast majority of foreign aid to continue to flow. It’s a scenario that many in Canada, China and Mexico hope will unfold on the trade front. Over the next weeks and months, industries and employers under stress will reach out to their members of congress, who will take it up to party leadership, who will then take it to an audience with the president, who (one hopes) finds some way to reverse course and save face. It can be done, but it will be tough sledding. For the record, I bought that bottle of Napa chardonnay. But I’m not going to drink it until the trade war is over. We all have to make sacrifices. dan.lett@freepress.mb.ca NEWS MONDAY, FEBRUARY 3, 2025 VOL 154 NO 71 Winnipeg Free Press est 1872 / Winnipeg Tribune est 1890 2025 Winnipeg Free Press, a division of FP Canadian Newspapers Limited Partnership. Published six days a week in print and always online at 1355 Mountain Avenue, Winnipeg, Manitoba R2X 3B6, PH: 204-697-7000 CEO / MIKE POWER Editor / PAUL SAMYN Associate Editor Enterprise / SCOTT GIBBONS Associate Editor News / STACEY THIDRICKSON Associate Editor Digital News / WENDY SAWATZKY Director Photo and Multimedia / MIKE APORIUS NEWSMEDIA COUNCIL The Winnipeg Free Press is a member of the National Newsmedia Council, which is an independent organization established to determine acceptable journalistic practices and ethical behaviour. If you have concerns about editorial content, please send them to: editorialconcerns@freepress.mb.ca. If you are not satisfied with the response and wish to file a formal complaint, visit the website at www.mediacouncil.ca and fill out the form or call toll-free 1-844-877-1163 for additional information. 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Call or email before 10 a.m. weekdays or 11 a.m. Saturday City: 204-697-7001 Outside Winnipeg: 1-800-542-8900 press 1 6:30 a.m. - 4 p.m. Monday-Friday.; 7 a.m. - noon Saturday; Closed Sunday TO SUBSCRIBE: 204-697-7001 Out of Winnipeg: 1-800-542-8900 The Free Press receives support from the Local Journalism Initiative funded by the Government of Canada Despite assurances from political leaders, confu- sion swirled over the weekend, with business owners and workers questioning the impact the tariffs may have on their bills, bottom line and job security. Several small business owners told the Free Press Sunday that the tariffs represent a confusing mess of information that they are now trying to parse — in order to respond and adapt, much as they were forced to during the COVID-19 pandemic. Jason The, the founder of the Winnipeg-based disc golf and Ultimate Frisbee retailer, Disc Republic, said his business is set to be heavily affected by the retaliatory Canadian tariffs (which will apply to sports equipment), as the popular manufacturers of Frisbees are located in the U.S. “I was hoping that maybe we could have hopefully dodged the bullet, and maybe they wouldn’t have put tariffs on our products — we’re categorized as sports equipment — so unfortunately, it is going to hit us pretty hard,” he said. He said it appears that Canadian tariffs on sports equipment will begin on Tuesday, meaning that he will not have time to place additional orders from his U.S. suppliers. If his goods were subject to tariffs starting in three weeks’ time, however, he would have rushed to order supply for the entire year to “weather the storm.” Jason The questions whether tariffs could even be applied on both sides: both when he orders goods from the U.S., then again when U.S. customers — roughly 15 per cent of his client base — order his products. He said that governments could assist businesses like his by helping out with shipping costs from non-tariffed countries, noting it is very expensive to ship from manufacturers in Europe or China. Darrell Brown, president of Kisik Commercial Furniture, an Indigenous company based in Winni- peg that supplies and installs office furniture, also expects his operation to be significantly affected. He said he could see a drop in sales due to increased prices and low demand, as businesses cut expansion and renovation plans. “There is a lot of confusion,” Brown said in an e-mail. “I still don’t have a clear picture of what I should be doing to mitigate my company sustainabil- ity through this trade war … My question is what assistance could be offered to survive the shrinking sales volume and keep my staff employed?” He suggested that similar assistance to the sup- ports made available during the pandemic would be welcome if tariffs are applied for a significant period of time. Meanwhile, Celeste Goncalves, the owner of Pure Wash in St. James, where she sells her own natural bath and body products, as well as nearly 30 other Canadian-made vendors, said the recent announce- ments leave small business owners like her confused and stressed out. “A lot of businesses closed down because of the pandemic, and now here we are again being small business owners trying to fight just to stay above water,” she said. “And really, who suffers is our consumers from the States,” she added. Goncalves said that while she makes an effort to purchase her raw materials from Canadian suppli- ers, there are a few things that she does buy from the U.S., including soap boxes. She said she planned to find a Canadian alternative, adding, “it’s not even about the money, it’s about the principle of it.” She also added that she’s aware of the tariff hotline, but that small businesses don’t necessarily have time to be on the phone — or even figure out what questions to be asking. A fact-sheet giving small businesses tips and explaining what they should or shouldn’t do would be helpful, she added. With the tariffs set to go into effect, Tabatha Bull, president and CEO of the Canadian Council for Indigenous Business (CCIB), told the Free Press that Indigenous businesses, like so many others, are reporting concerns over increased costs and the competitive disadvantage they will be at, but also of the uncertainty in general, noting that “even the threat of tariffs have already had an impact on the economy.” “The list that is out of the $30 billion (in initial tariffs) is a very long list,” she said. “How will the government also be supporting businesses, particu- larly small businesses, who are one or two people, to get that support they need to answer the questions that are specific to them?” She said support will be needed for Indigenous businesses who were looking to expand into the U.S. market — for them to restrategize and find new partners. As well, she noted, the CCIB is focused on advocating for reduced interprovincial trade barriers and simplifying different procurement processes between federal, provincial and territorial governments. The CCIB is also reminding governments on both sides of the border of the requirements of the 1794 Jay Treaty, which is meant to allow First Nation people to freely trade and travel across the border. “That has not been upheld,” she said. — with files from The Canadian Press marsha.mcLeod@freepress.mb.ca katie.may@freepress.mb.ca MANITOBA ● FROM A1 DAN LETT OPINION ADAM TREUSCH / FREE PRESS A section of American wines at a Liquor Mart in Winnipeg on Sunday. Products from the U.S. are set to be pulled from store shelves in retaliation for Trump’s tariffs. Facing the reality of Trump’s irrational trade war RUTH BONNEVILLE / FREE PRESS FILES Darrell Brown of Kisik Commercial Furniture expects his business to be significantly affected by the new tariffs. Business groups, economists speak out against Trump’s tariffs TORONTO — Corporate Canada and a slew of industries fuelling the country’s economy are decrying U.S. President Donald Trump’s incoming tariffs, warning they will not just in- crease the cost of doing business but also weigh on everyday life. Associations representing everyone from farmers and miners to homebuilders and res- taurant owners spent Sunday speaking out against the tariffs — 25 per cent on Canadian goods and 10 per cent on energy — which are both slated to take effect Tuesday, when Can- ada’s own package of retaliatory tariffs starts to kick in. Canada’s retaliation, announced Saturday, will begin by targeting $30 billion in U.S goods on Tuesday, followed by $125 billion in addition- al duties on American products in 21 days. “The (U.S.’s) move is reckless and will cause economic hardship in both the U.S. and Can- ada,” Richard Lyall, president of the Residen- tial Construction Council of Ontario, said in a statement Sunday. “Our countries and supply chains are inter- twined and dependent on each other, so nobody wins in a tariff war.” His feelings were echoed from coast to coast as business groups reckoned with the reality that the forthcoming tariffs are so broad they could transform nearly every aspect of the Can- adian lifestyle. Business analysts warned the duties will like- ly depress the Canadian dollar, push up infla- tion and require an aggressive series of interest rate cuts as the country works to make it cheap- er to borrow cash to keep the economy ticking. “Trump’s tariff hammer will come down hard on Canada’s economy,” Douglas Porter, a chief economist with BMO Capital Markets, wrote in a Sunday note. “If the announced tariffs remain in place for one year, the economy would face the risk of a modest recession. A couple quarters of contrac- tion are well within the realm of possibility.” He predicted the Bank of Canada will carry out a quarter-point interest rate drop with each announcement, bringing the benchmark rate to 1.50 per cent in October — lower than previous forecasts. That forecast was based on BMO calcula- tions showing the tariffs will reduce real GDP growth to roughly zero in 2025, reflecting de- creased demand for Canadian exports to the U.S. Meanwhile, Tu Nguyen, an economist with RSM Canada, forecast the tariffs would take inflation from its current two per cent level to a 2.7 per cent headline number as businesses pass on the cost of increased duties to customers. As for the loonie, she believes it will slide some more, bringing it even further below its current level, which hearkens back to the early days of the COVID-19 pandemic. “The depreciation of the Canadian dollar could mitigate the prices of exports for U.S. importers, but this exacerbates the pain for Canadian businesses and consumers,” she told investors in a note. The economists and several business associ- ations seemed to agree the promised tariffs are much more significant than the 25 per cent duty on Canadian steel and 10 per cent on aluminum the Trump administration applied in March 2018. RESCON president Lyall said these tariffs will hike costs and cause a further slowdown in residential construction, which will “ex- acerbate an already dire housing affordability crisis.” Canadian Chamber of Commerce president Candace Laing saw the impact as being even more broad. She said the incoming tariffs are “profoundly disturbing” and “will drastically increase the cost of everything for everyone,” hurting families, communities and businesses. The Canadian Chamber has estimated that a 25 per cent tariff across the board could cost Canadian households an average of $1,900 per year. That number could grow if Trump makes good on his promise to intensify his actions, should Canada retaliate, which it plans to do. The $30 billion basket of items Canada is first targeting includes plenty of everyday goods like meat and milk but also household staples like carpets and curtains. If the U.S. doesn’t let up, Canada will follow up its first round of tar- iffs with $125 billion in duties on other Amer- ican products in 21 days. With fruits and vegetables like raspberries, peppers and cucumbers making the first round of tariffs, the Canadian Federation of Agricul- ture said it was concerned about how the more than 190,000 family farms it represents will be impacted. The agriculture sectors in Canada and the U.S. rely on each other to buy and sell one an- other’s products and the fertilizer used to grow food, said the CFA’s president Keith Currie in a statement. “No one wins in a trade dispute between Can- ada and the U.S. except for our competitors around the world,” said Currie, adding tariffs are simply “bad business.” — The Canadian Press TARA DESCHAMPS ;