Quebec companies announce layoffs ahead of Trump tariffs

Quebec manufacturers are announcing layoffs, saying U.S. President Donald Trump's repeated threats of tariffs, now expected to come into effect in a month, are already affecting sales.

The U.S. is Quebec's top trading partner, with most manufacturers in the province trading and selling to American companies and consumers. 

Montreal-based tights manufacturer Sheertex (SRTX), now a publicly traded company, announced on LinkedIn Wednesday morning it would be temporarily laying off 40 per cent of its 350 employees in preparation for the tariffs.

Katherine Homuth, the company's CEO and founder, wrote that although the U.S. tariffs on Canadian goods are planned at 25 per cent, SRTX is facing 41 per cent tariffs across its U.S. shipments due to additional duty fees it faces. 

"We are in a worst case scenario," Homuth wrote, explaining that the company's tights aren't considered "Made in Canada" because SRTX imports more than nine per cent of its raw materials. 

WATCH | Employees are being let go in Quebec as tariff threat lingers: 

Tariffs may be paused, but the job cuts have already begun in Quebec

6 hours ago

Duration 2:10

Several companies have announced major cuts to their workforces. Although there are several factors at play, they all rely heavily on sales south of the border and have cited the uncertainty caused by U.S. tariff threats as a reason for reducing their workforce.

The company is using the 30-day delay on tariffs — announced after a phone call between Prime Minister Justin Trudeau and U.S. President Donald Trump Monday — to move some of its inventory to the U.S., where Sheertex does 85 per cent of its sales.

The layoffs are temporary but come at a time when SRTX has been fundraising additional capital to stay afloat. 

"If you believe in the importance of making things here, in building not just brands, but the factories and technologies that power them, now is the time to stand with manufacturers," Homuth wrote.

Manufacturers tighten operations

Another well-known Quebec manufacturer, furniture-maker South Shore, also announced on Wednesday that it would be laying off 115 employees. 

In a news release, the company said 70 per cent of its sales are conducted in the U.S. and that it had seen those plummet in the face of Trump's tariff threats. 

It said the threats had prompted the company's American buyers to increase their imports of Asian products. The layoffs include 97 jobs at South Shore's head office plant in Sainte-Croix, a town 200 kilometres northeast of Montreal on the St. Lawrence River. Another 18 employees at South Shore's Coaticook plant in the Eastern Townships will be affected.

"South Shore is calling on consumers to turn massively to Canadian products to collectively face this unprecedented situation," the news release said.

The company, which was founded in 1940, noted it had already survived several economic crises and that it intended to review its current business model.

Uniboard, a Laval-based wood products manufacturer, said Tuesday it would be temporarily closing five production lines at its Sayabec plant in the Gaspésie region.

Fifteen employees will lose their jobs, which CEO James Hogg said represented less than 10 per cent of the company's roughly 400-employee workforce. 

He attributed the layoffs to the uncertainty caused by U.S. tariff threats. 

"We don't know exactly what the customer reactions are going to be. Are they going to cancel orders? Are they going to put things on hold? Those are all [reactions] we've seen since Sunday," Hogg said.

Hogg said he hopes the company will be able to resume its normal operations if Trump drops his tariffs idea. 

Otherwise, the future will be "worse than this short period of turbulence and chaos," he said. 

Uncertainty 'devastating' for business

Francesco Amodio, an associate professor of economics and international development at McGill University, said the uncertainty created by Trump going back and forth on the timing of imposing tariffs and whether they would even go into effect "could be devastating to some firms" because of the thin margins within Canadian and Quebec manufacturers must operate. 

"If you are doing textiles today in Canada, it means that you are overcoming huge challenges when it comes to the cost of production," said Amodio, explaining that international competition for local manufacturers is so high that any risks could prompt clients to take their business elsewhere. 

During the COVID-19 pandemic, for example, Vietnam became an important exporter to the U.S. 

Canadian companies will have to look at other potential countries and markets it could export to, including China and in Europe, Amodio said. Interprovincial trade is another important part of the puzzle, he added. Federal Internal Trade Minister Anita Anand has said this week her office was looking to improve trade between provinces. 

One of Quebec's economic weaknesses, Amodio said, is its lack of competition. A way of making it less dependent on the U.S. "is to make our own economy more competitive in several sectors, from construction to telecommunications and the tech sector in general," he said.