Looming U.S. tariffs, falling loonie worry Manitoba manufacturers as production costs rise

Posted on February 20, 2025 by Peggy

The CEO and co-owner of Peerless Garments in Winnipeg points to dozens of finished garments around his factory and says he’s worried.

Albert El Tassi says his customers will need to absorb the rising costs from U.S. President Donald Trump’s promised 25 per cent tariffs against Canadian products, if they come into effect in a couple of weeks, which is something he’s not sure his customers can sustain.

“The customer has to accept the increase we [are] proposing to them,” El Tassi told CBC Radio’s Information Radio on Thursday.

“You have to mark it up because you were making profit, and now you want to make a profit on [the added] 25 per cent too … so the consumer has to pay basically 50 per cent more, not 25.”

Tariffs would increase costs for materials sent back and forth across the border, meaning the cost to manufacture those garments will rise, as will the cost of the finished product.

Information Radio – MB11:13Manufacturing, Tariffs, and the Push for Canadian-Made Goods

Manitoba’s manufacturing sector faces a crossroads with the potential for U.S. tariffs on Canadian exports. While 80% of what we make is shipped south, some local manufacturers, like Raber Gloves, are choosing to focus on the booming demand for Canadian-made products. Howard Raber, the maker of Manitoba’s famous garbage mitts, shares his insights on navigating this shift. Plus, Terry Shaw from the Canadian Manufacturers & Exporters weighs in on the growing pressures and opportunities in the industry.

El Tassi says 30 per cent of his 87 employees — including some who have worked at the 84-year-old Manitoba business for up to 50 years — could be out of a job if the customer balks.

The contract is worth $3 million to $4 million, and is currently his company’s largest U.S. contract.

Manufacturers employ 70,000 people across 1,400 companies in Manitoba, and a national survey conducted by the Canadian Manufacturers and Exporters Association last month suggests half of respondents will lay off workers, says association vice-president Terry Shaw on Information Radio.

A man with short grey hair and a grey goatee is seen from the head and shoulders, smiling and wearing glasses. — ‘The uncertainty is getting people to sit on their hands. They’re stopping investment, they’re stopping hiring … and that’s in advance of the tariffs,’ says Terry Shaw, vice-president of the Canadian Manufacturers & Exporters. (Terry Shaw/LinkedIn)

Shaw says the threat of tariffs has left manufacturers unsure of where to turn.

“The uncertainty is getting people to sit on their hands. They’re stopping investment, they’re stopping hiring … and that’s in advance of the tariffs,” Shaw said.

Sixty per cent of what Canada ships to the U.S. is material American manufacturers use to create their finished products, and Canada imports more than half of material needed to manufacture things from the U.S., Shaw says.

“We don’t compete as economies. Canada and the U.S., we collaborate, we actually build things together, have for many, many decades,” Shaw said.

He says looming tariffs have created risk for those big companies that straddle the Canada-U.S. border.

“They’ll say, ‘Well, we’re going to close the Canadian manufacturing in Manitoba because, frankly, the dollar is a challenge and we make more money in the States,'” Shaw said.

The dropping value of the Canadian dollar is also a factor in rising production costs, something Raber Glove Manufacturing is facing because most of the materials used to make its well-known Garbage Mitts are purchased in U.S. dollars.

“The weakening Canadian dollar is affecting our pricing,” said Howard Raber, owner of the Winnipeg company that’s been in business since 1941 and employs between 40 and 45 people, on Information Radio.

“The majority of the components that goes into our products are bought in U.S. dollars, and for this year alone it reflected a cost increase of anywhere between eight and 10 per cent,” Raber said.

‘Ups and downs’

Premier Wab Kinew says Manitoba has prepared two budgets to brace the economy for potential tariffs, and will also make changes if U.S. tariffs aren’t invoked.

“You’re going to see I guess basically the two forks in the road: Here’s the budget if all goes well, and here’s the budget where we have to stand up to support manufacturers and Manitobans in a very direct way,” Kinew said.

When Trump threatened an economy-wide 25 per cent tariffs at the beginning of the year, Kinew said tax deferrals could potentially be used to help companies.

A man in a suit speaks at a podium while other people stand behind him — ‘I’m very confident Manitoba is going to get through this,’ says Premier Wab Kinew. (Ben Curtis/The Associated Press)

“The tax deferral thing, if there are tariffs applied, that is one of the tools that we’ll be using to support businesses,” Kinew said.

Removing the barriers to interprovincial trade has been another hot topic among Canadian politicians.

Brewers and distillers can expect to see opportunities for interprovincial trade open up to help companies sell their products across the country, Kinew says.

Additionally, Manitoba is already reviewing its procurement policy to focus more on Manitoba and Canadian businesses, the premier says.

According to the Manitoba Bureau of Statistics, the province exported $15.5 billion worth of goods and services to the U.S. in 2023.

“I’m very confident Manitoba is going to get through this,” Kinew said. “We got this is what I would say, but that doesn’t mean it’s going to be smooth sailing. There’s going to be ups and downs.”

Winnipeg based manufacturer waiting in limbo to see impact of potential tariffs

38 minutes ago

Duration 2:10

The threat of U.S. tariffs in the coming weeks has Canadian industries uncertain about their future. The owner of Peerless Garments in Winnipeg says his customers will need to absorb the rising costs from U.S. President Donald Trump’s promised 25 per cent tariffs, something he’s not sure his customers can sustain.