Metal casket maker ready for trade war to end after steel hit with 50% tariff

At precisely noon, the casket welders, sanders and paint sprayers are turned off and a quiet hum settles over the Magog Caskets factory floor in southeastern Quebec.

"The new closing time," says one of the workers as he removes his ear buds.

"New" as a result of the imposition of tariffs and counter-tariffs between the United States and Canada.

"The Trump administration is charging me a tariff. It's like, whatever I do, [the U.S.] is trying to strangle me," said Nicolas Lacasse, the owner of Magog Caskets. "And when I try to defend myself, it's like Canada is holding my hand, so I can't defend myself."

Magog Caskets is the only manufacturer of metal caskets in Canada, which it sells primarily in Quebec and the U.S. And the primary material used to make those caskets? Steel.

Not only has the U.S. imposed a 50 per cent tariff on aluminum and steel, but Canada has imposed a reciprocal tariff of 25 per cent.

So Lacasse has had to reduce his employee workload from 39 hours a week to only 15 to 20 hours because he no longer makes a profit.

Best response in world of bad options

Like thousands of businesses across Canada, Lacasse has had to come up with the least painful option when faced with tariffs and counter-tariffs.

His first option is to continue buying Canadian steel but face a 50 per cent tariff on the finished caskets going into the U.S. Option 2, and the one he chose: buy American steel, eat the cost of the exchange rate and pay the 25 per cent counter-tariff on the raw material.

"That was the most cost-effective one, actually," Lacasse said. "It's still creating trouble here, though. I'm running at a loss."

According to an analysis by Statistics Canada, 53 per cent of import-export companies in Canada think the tariffs will have a high-to-medium impact on business within the next three months.

April saw Canada's largest recorded merchandise trade deficit, as companies attempted to minimize the damage to consumer pocketbooks.

"We are seeing a large number of companies take all sorts of aggressive steps to either cancel contracts, avoid shipping or otherwise renegotiate pricing, for example, with their customers or their suppliers," said William Pellerin, a trade lawyer with the firm McMillan LLP.

"It's very destabilizing. There's no question about it."

Option to pass cost to customer impossible

Lacasse says while some businesses have the option to pass the increased tariff-related costs on to customers, that's impossible for him.

As the only Canadian metal casket manufacturer, the company only competes with those in the United States. Those companies aren't raising prices, so he can't.

As a result, he has appealed to the Canadian government to give his niche business an exemption.

"Right now, it's only my cash flow that keeps me going," he said. "We need to get help from the government to at least avoid that 25 per cent tariff, like they did in the automotive industry. That's the only way we can make it survive at this point."

The Canadian government has been giving exemptions, but there is a backlog in demands.

In April, Finance Minister François-Philippe Champagne said those exemptions are meant to help companies in the short term.

"We're giving Canadian companies and entities more time to adjust their supply chains and become less dependent on U.S. suppliers," Champagne said.

"There are definitely clients that have benefitted greatly from the various exemptions, including a remission, which is a large-scale exemption that the government of Canada offered in mid-April," said Pellerin, the lawyer.

"The government's looking at it based on the best interests of Canada. These exemptions are retroactive, but we're expecting that they're going to take four to six months before they're granted."

For some companies, that may be too late. Lacasse hopes Magog Caskets isn't one of them.