Winnipeg tire exporter says no choice but to eat costs of U.S. tariffs
Pivoting for exporters relying on American market will take time: CFIB
A Manitoba exporter that gets most of its business from the U.S. says the Canada-U.S. trade war is already hurting his company.
Derek Hird, founder of Evolution Wheel, says 85 to 90 per cent of the Winnipeg-based tire manufacturer's sales come from the States.
The company had ramped up shipments to U.S. customers in anticipation of the 25 per cent tariffs the country slapped on Canadian goods on midnight Tuesday, sparking the trade war.
Hird said he sold a ton of product while Donald Trump's threats to impose them remained a bluff, but that at midnight, those threats "became real."
"There's a difference between expecting something to happen and then it actually being in place," Hird said.
"We still have a lot of backlog to get through and out the door that now we have to pay higher prices on," he added. "We're going to eat it.… We have no choice but to."
Hird said Evolution Wheel competes with several companies who won't be affected by the tariffs, and that it has no other option but to keep prices the same and bear the costs to avoid losing ground.
About 35 people work for the company full-time, he said.
"It's been harder and harder to come in and look everybody in the face, wondering what we're going to do," Hird said.
A 25 per cent tariff on gross product sales is "more than the company made last year," he said. "That means you go to zero and below, and we all know what happens then."
Counter-tariffs on an initial tranche of $30 billion worth of American goods came into effect at the same time as the U.S. levies, with Prime Minister Justin Trudeau promising $125 billion more in three weeks' time.
Hird said those counter-measures will likely make things worse for the company, which imports some of its supplies from the U.S.
'Hard to pivot'
Small and medium-sized enterprises accounted for about 40 per cent of Canadian exports to the U.S. in 2023, according to data from Statistics Canada.
The Canadian Federation of Independent Businesses says one in three small business owners generated over half of their sales in the U.S., based on 558 responses in a recent survey of CFIB members looking at the impacts of the tariffs.
"If you're an exporting company … it's actually pretty hard to pivot," Corinne Pohlmann, executive vice-president of advocacy with CFIB said in an interview with the CBC's Up to Speed.
"They have to take some more time to find other ways to potentially get to other markets. They may have to end up laying people off in the interim as they try to figure out how to contain costs."
Hird said Evolution Wheel might consider a "hybrid system" in the future that would allow them to shift some production to the U.S., but that everything comes at a cost.
"It's not that we want to move or it's not that we want to do things," he said. "But somebody told me once that when you have to figure out how to put food on your table, you're going to do what you got to do.… That's what we're looking at, is how do we make sure there's food stay on the table?"
With files from Alana Cole