John Chilibeck
Local Journalism Initiative Reporter
The Daily Gleaner
Donald Trump’s threat to impose 25 per cent in tariffs on Canadian goods has convinced a New Brunswick businessman to look into moving his manufacturing plant to the United States.
Darrin Smith, the owner of JessEm Tools in Moncton, says he’s a fan of conservative politics and Trump, who will be inaugurated as U.S. president next week.
He’s fed up with the last nine years of Justin Trudeau’s Liberal federal government in Ottawa and doesn’t like the direction his home country has gone.
Faced with a possible tariff that would crush his export-driven business, he says he’s talked to a few different states about moving his business south of the border.
JessEm Tools, which makes woodworking tools for hobbyists and professional cabinet makers, has 65 employees at its plant in the Moncton Industrial Park West.
“We were going to go on a hiring blitz, but we’re just going to hold off right now to see what happens at the end of the month,” Smith said in an interview.
“I’m pretty conservative and I don’t like to see homelessness here and the 12-hour waits in the emergency rooms. I’m not a fan of this insane amount of immigration, and I think Canada has been destroyed over the last nine years. So, I think Donald Trump is trying to teach Canada a lesson.
“I’m going to pay a very big price, but in a way I’m all for it.”
Smith has uprooted his family business before. He started it in 1998 in Orillia, Ont., then moved to Moncton in 2021 where he could buy more land and open a much bigger plant nearly three times the size at 85,000 square feet.
With three-quarters of his annual $14 million in sales going to the United States, he said he couldn’t afford a crushing new cost, nor did he want to pass that on to consumers already struggling with inflation.
“If Trump brings in a 25 per cent tariff, we’re probably going to have to reduce our staff by 80 per cent,” he warned. “We’ve already made a few calls to a few states to look at all the options, to see if we need to make a move. I don’t want to move, I’d rather fight to save Canada. But just in case, if I need to pick up and move to the States, I’ll do that.”
Since winning the Nov. 5 election, the U.S. president-elect has mused about annexing Canada through economic conquest, making it the 51st American state. He’s also threatened massive tariffs.
Trump doesn’t like the U.S. trade deficit with Canada, which was $8.2 billion in November, and argues the United States is subsidizing the Canadian economy.
He’s also angry about fentanyl and migrants crossing the border illegally. Synthetic opiates like fentanyl cause most overdose deaths in the United States, more than 100,000 a year, and Trump has pledged to deport up to 11 million undocumented migrants in his own country.
New Brunswick business organizations warn that if his administration does slap on a 25 per cent tariff on Canadian goods, it will hurt Americans just as much as Canadians, given their appetite for products and services that come from their northern neighbour.
Businesses are already preparing for the worst, says Ron Marcolin, a regional vice president with Canadian Manufacturers and Exporters, an industry association.
“Manufacturers are worried and what they’re trying to do is lower the risks,” he said. “They’re going into this assuming the tariffs will be imposed and countervailing duties will be coming down as well.”
Marcolin said many Canadian manufacturers have imposed a hiring freeze. About one-third, according to the organization’s surveys, are delaying investments.
“At the start of the year, you normally have a plan to start spending money, including investing in your plants and your people, including training. That’s delayed.”
He said some businesses are also accelerating shipments, hoping to reduce their inventory, before any tariffs take effect. That includes shipping more materials to the United States and ensuring raw materials from down south make it to Canada before prices change markedly.
“It’s cyclical. If you think of hiring, they might say in quarter one of 2025, we’ll just hold off roughly three months till quarter two, and we hope by the three-month mark everything is back to somewhat normal and then we can make those investments in people or machinery. So, they’re hitting a pause button.”
Monica Gaudet-Justason, president and CEO of the New Brunswick Business Council, said big businesses are hoping any new tariffs won’t last too long and that eventually they’ll win exemptions.
“If it’s 25 per cent, it’s gonna hurt,” said Gaudet-Justason, whose council represents 25 of the most important business leaders in the province, from firms such as McCain Foods, Groupe Savoie, Ganong Brothers and Imperial Manufacturing.
“Many of the bigger companies can weather a storm like that for a period. They prepare for such possibilities. But everyone agrees that 25 per cent is a concerning number. And they’re talking to their U.S. counterparts because such a high figure would affect the U.S. negatively as well.”
A prominent economic consultant predicts Trump won’t go ahead with across-theboard tariffs.
David Campbell of Jupia Consultants in Moncton said he expects the new U.S. administration to impose strategic tariffs like it did during the first Trump presidency, when duties were slapped on Canadian steel and aluminum.
“If he goes with across-theboard tariffs, it will immediately put up the pump price for gas in New England 25 per cent. The Irving refinery in Saint John, which supplies our largest export, is the main provider of refined oil products in New England. So, I could be wrong, but I can’t believe the people in the northeastern U.S. are going to put up with a big spike in their gas.”
Campbell and other economists have warned that a trade war with Canada would make prices spike even worse for American consumers. Many observers believe Trump was elected because of anger with inflation and the Biden administration’s failure to curb it fast enough.
“If you want to buy a lobster in a New York restaurant, it’s already incredibly expensive. You want to put it up by another 25 per cent? I have to believe that on a lot of this stuff we export to the U.S., they’ll be exempt.”
New Brunswick exports about half of its goods and services to other countries, and about 91 per cent of those total exports goes to the United States, according to Statistics Canada.
It represents $15.5 billion in trade to the U.S. Imposing tariffs could cost American consumers an extra $3.9 billion, if New Brunswick businesses pass along the punishing price.
Small and medium-size businesses in the province are also deeply concerned, says Louis-Philippe Gauthier, spokesman for the Canadian Federation of Independent Business.
“They’ll have to hike prices,” he warned. “And the effect of tariffs would be to slow down the economy. That has two elements. The Canadian dollar would be devalued, making imports to Canada more expensive.”
That’s already happened.
Trump’s win has seen the Canadian dollar tumble. On Oct. 31, a few days before the presidential election, a loonie was valued at close to 73 cents US. On Monday, it was trading in the 69-cent range, a generational low. The average over the last decade has been 76 cents.
The depressed loonie ironically makes Canadian products cheaper and more attractive to U.S. buyers. But if across-the-board tariffs go ahead, any savings would be wiped out, with prices going way up for American consumers, Marcolin said.
That’s why his organization has been in discussions with its sister organization in the United States, the powerful lobby group the National Association of Manufacturers, to convince Republicans that tariffs are a bad idea.
“This is going to cost the American consumer as well,” he said. “And a lot of people, including Trump, don’t focus on that. They don’t talk about the cost of this to their own people. They talk about the anti-Canada rhetoric and imposing tariffs on everything. But what they don’t think about is all the finished goods that come in that people use immediately. What about cars, softwood lumber for building houses?”
He and the others warned a prolonged trade war could lead to an economic recession. That could lead to scores of layoffs and plants shuttering.
Smith, meanwhile, said he’d love to stay in Canada. One of his goals, he said, was to make his factory the highest paid in Moncton.
He said the starting pay for unskilled work in his plant is $22 an hour, but others with more experience and skill earn more.
But he’s jaded about the reception he received from politicians when he moved to the province with his family firm, named after the nicknames of his two daughters, Jess and Em.
The switch included a five per cent payroll rebate for three years from Opportunities New Brunswick, funded by provincial taxpayers.
Smith said that money didn’t amount to much for his business.
The entrepreneur described feeling upset about extending an invitation to local politicians for a tour of his new building after it had been running for a year, when he thought they’d be coming to him with open arms.
“I didn’t even get a fruit basket to come here,” he laughed. “I’m a Canadian and my family is from the East Coast, I love Canada, but if I have to go, I’ll go.”