Economists and industry experts are warning that the ongoing trade friction between Canada and the United States will lead to increased expenses for consumers and businesses, affecting various sectors including electronics and artificial intelligence infrastructure.
Last year, Canada exported over $4 billion US worth of electronics goods to the U.S., which are now subjected to the new 50 per cent tariffs imposed by President Donald Trump. Notably, certain electrical boards and controllers are among the top categories targeted by these tariffs.
Canadian Prime Minister Mark Carney announced that Canada will reciprocate the U.S. tariffs, matching them dollar for dollar.
Experts predict that higher prices are inevitable as the trade conflict intensifies, posing risks to businesses on both sides of the border.
Carol McGlogan, the president and CEO of Electro-Federation Canada, a group representing over 230 companies in Canada’s electrical and automation industry, expressed concern over the devastating impact of the 50 per cent tariffs. She highlighted that 90 per cent of the exports from the group go to the U.S.
McGlogan emphasized that the price hikes will have wide-ranging effects, impacting sectors such as housing, education, and infrastructure development. She mentioned the necessity of expanding the electricity grid by 2050, noting that the tariffs will raise costs for everyone, ultimately burdening taxpayers.
Evan Light, an associate professor at the University of Toronto, pointed out that products like gaming consoles and cell phones have already been experiencing price increases due to chip shortages and supply chain challenges. He anticipated that the trade tensions between Canada and the U.S. will further escalate prices for these items.
Light warned of the immediate negative impact on consumers, expecting a ripple effect of increased costs across various sectors.
Andrew Bell, the chief product officer at Ottawa-based Kinaxis, a software company specializing in supply chain management, revealed that many clients are already exploring new suppliers in response to the tariffs. He stressed that while the tariffs initially affect supply chains, the end result is higher costs for consumers.
Will tariffs slow AI adoption?
Bloomberg News recently reported that Nvidia, a leading technology company, cautioned customers about potential price increases of up to 15 per cent for its artificial intelligence chips.
Bell highlighted that supply chain disruptions, including tariffs, lead to increased component costs, affecting companies like Nvidia. This trend could potentially hinder the adoption and deployment of artificial intelligence technologies.
Professor Light raised concerns about the long-term impact of rising prices on AI development, suggesting a need to reassess the commitment to AI investments in both the U.S. and Canada.