Trump’s New 50 Per Cent Tariffs Put Northern Ontario Businesses on Alert

THUNDER BAY — Northern Ontario businesses are facing another period of trade uncertainty as United States President Donald Trump prepares to impose an additional 50 per cent tariff on a wide range of Canadian products.

The tariffs are scheduled to take effect Aug. 19, 2026 — at 12:01 a.m. Eastern time, unless negotiations between Canada and the United States produce a change before then.

For Northern Ontario, the greatest immediate concern is likely to be forestry, wood and paper products and smaller manufacturers selling into the U.S. market.

Mining and steel face a more complicated picture because several major resource products are excluded from these new tariffs or are already covered by separate U.S. duties.

What Washington Has Announced — and the Date That Matters

Trump signed three proclamations on July 20 using Section 338 of the U.S. Tariff Act of 1930. The measures impose an additional 50 per cent tariff on specified Canadian goods and, unusually, apply even when those goods qualify as Canadian-origin products under the Canada-United States-Mexico Agreement.

The affected categories extend well beyond the auto, dairy and alcohol disputes cited by Washington. They include certain wood and paper products, furniture, cement, agricultural goods, textiles, machinery, sporting goods and other consumer products. Reuters estimates the measures cover nearly $20 billion US in Canadian imports, representing about 5.2 per cent of U.S. goods imports from Canada in 2025.

There are significant exclusions. The new Section 338 duties do not apply to energy, potash, fish, critical minerals or products already subject to U.S. Section 232 tariffs.

Canadian and American officials were still negotiating in early August. Reuters reported Aug. 7 that discussions included possible Canadian concessions concerning autos, dairy and American alcohol in exchange for Washington withdrawing the new tariffs and potentially reducing existing steel and aluminum duties. There was no guarantee of an agreement.

Forestry Could Be Among Northern Ontario’s Biggest Pressure Points

For Northwestern and Northeastern Ontario, forestry is one of the sectors that deserves particularly close attention.

FedNor says 96 per cent of Ontario’s forestry exports go to the United States. It also identifies 10 Northern Ontario communities where at least 20 per cent of community income is connected to forestry. Ontario’s forest sector supported more than 128,000 direct and indirect jobs provincewide in 2024.

That does not mean 96 per cent of Ontario’s forestry exports will suddenly face the new 50 per cent tariff. The tariff schedules are product-specific and some forest products are already covered by other U.S. trade measures. Global Affairs Canada says the new Section 338 measures include certain wood, paper and value-added wood products.

For Northern Ontario sawmills, paper producers and secondary wood manufacturers, the risk comes from both the tariff itself and the uncertainty surrounding it.

A U.S. importer facing a substantially higher landed cost can respond by raising prices, asking its Canadian supplier for a lower price, reducing orders or seeking another supplier. Even when the American importer technically pays the tariff at the border, some of the economic burden can ultimately be pushed back onto Northern Ontario producers through lower prices or lost sales.

That matters in communities where one mill or forestry operation supports contractors, trucking companies, equipment dealers, fuel suppliers and local retailers.

Algoma Steel Remains Exposed — But Not to This New Tariff

Sault Ste. Marie’s Algoma Steel illustrates why Northern Ontario businesses need to distinguish between different U.S. tariff programs.

Steel products already subject to Section 232 tariffs are excluded from the new Section 338 tariff, meaning the new 50 per cent measure is not simply being stacked on top of the existing steel tariff.

However, Algoma is already dealing with the consequences of U.S. steel tariffs. Ontario reported in September 2025 that the United States had imposed 50 per cent Section 232 tariffs on Canadian steel and described Algoma as the largest employer in Sault Ste. Marie and the second-largest private-sector employer in Northern Ontario. The federal and provincial governments subsequently arranged $500 million in financing to help the company adjust.

The broader trade negotiations therefore remain important to Sault Ste. Marie. Reuters reported that a possible Canada-U.S. agreement could include reductions in existing American steel and aluminum tariffs, although no agreement is assured.

Mining and Critical Minerals Have Some Protection

Northern Ontario’s mining sector appears to have greater direct protection from this particular round of tariffs because critical minerals are specifically excluded.

That is significant for a region holding major nickel, cobalt, lithium, graphite, chromite and other mineral resources. FedNor reports that Northern Ontario produces about 26 per cent of Canada’s minerals and that 56 per cent of the region’s mineral production is exported to the United States.

The exemption, however, does not make mining immune from the wider trade dispute. Mining supply companies selling manufactured equipment or other finished products into the United States must still determine whether their specific products appear on the U.S. tariff schedule.

A prolonged trade dispute could also affect investment decisions, equipment costs, exchange rates and the willingness of companies to commit capital to new projects.

Transportation and Border Businesses Could See Changing Trade Flows

Northern Ontario exported more than $10 billion in goods in 2024, according to FedNor. The region already faces higher transportation costs than southern Ontario because of its geography and distance from major markets. FedNor identifies transportation costs as a significant concern for regional small and medium-sized enterprises.

Tariffs can add another layer of cost and uncertainty.

Exporters may change shipping schedules, consolidate loads, renegotiate contracts or reconsider whether some U.S. customers remain profitable. Trucking companies, customs brokers, warehouses and other firms supporting cross-border commerce could consequently see changing shipment volumes.

What Northern Ontario Businesses Can Do Now

The first priority is knowing whether the tariff actually applies to the product being sold. Exporters should review their Harmonized Tariff Schedule classifications with their customs broker or qualified trade adviser rather than assuming that all Canadian exports face the new duty. The new tariffs are based on specific tariff classifications, while numerous products are excluded.

Companies should then calculate their exposure customer by customer. A 50 per cent tariff can transform the economics of a sale, so businesses should model their landed price in the United States, determine who is contractually responsible for duties and discuss pricing with American customers before shipments arrive.

Businesses should also examine diversification without assuming they must abandon the U.S. market. Export Development Canada says Europe and Asia-Pacific markets have become increasingly important diversification targets for Canadian exporters. Canada also has trade agreements providing preferential access to dozens of countries.

Northern Ontario manufacturers can also look closer to home. Selling more within Ontario, other provinces and territories or into Canadian infrastructure, defence, mining and resource projects could reduce the percentage of revenue exposed to a single foreign market.

Productivity will matter as well. Automation, energy efficiency, improved logistics and higher-value manufacturing can help companies absorb some costs or compete in markets where Canadian quality and reliability command higher prices. This is particularly important for forestry businesses looking beyond commodity lumber toward engineered products, biomass and other value-added uses.

Government Financing and Tariff Support Are Available

Businesses should not assume they have to absorb the adjustment alone.

The federal government’s Regional Tariff Response Initiative provides support for tariff-affected small and medium-sized businesses, including through FedNor in Northern Ontario. FedNor says the program is intended to improve productivity, strengthen supply chains and help businesses diversify into new markets.

Export Development Canada’s Trade Impact Program is providing an additional $5 billion over two years in financing and support for eligible Canadian businesses dealing with trade disruption. EDC is also offering market intelligence, insurance and assistance with international diversification.

The federal government also points businesses toward tariff-remission processes, the Duties Relief Program, the Drawback Program, sector-specific forestry and steel assistance and programs designed to prevent layoffs when employers experience temporary reductions in business.

For Northern Ontario firms, FedNor, Community Futures Development Corporations, the Business Development Bank of Canada, EDC and the federal Trade Commissioner Service should all be part of the conversation before companies make major decisions concerning staffing, investment or abandoning markets.

The Biggest Risk May Be Uncertainty

Businesses can adapt to a known tariff. Constantly changing tariff rules are harder.

Investment may be postponed when companies do not know what access to their largest export market will look like six months from now. Customers may delay purchases. Lenders become more cautious. Manufacturers hesitate before purchasing equipment or hiring workers.

Northern Ontario is particularly exposed because of the importance of natural resources and manufacturing to smaller communities and the region’s reliance on exports. FedNor forecasts strong regional growth driven by mining, forestry and manufacturing, but its own 2026-27 planning documents identify U.S. tariffs as a threat to that outlook.

There is also an important historical dimension. Section 338 comes from the Tariff Act of 1930 and had remained largely dormant for decades. Reuters described Trump’s July action as the first known use of the provision to impose tariffs in nearly a century.

For Thunder Bay and Northwestern Ontario businesses, the best response is therefore not simply to wait for Ottawa and Washington.

Companies need to know exactly where their tariff exposure lies, protect cash flow, talk with customers, improve productivity and start building additional markets. The United States will remain a critical customer for Northern Ontario, but the latest dispute reinforces a lesson businesses have heard repeatedly since the trade conflict began: relying on one market carries considerably more risk than it once did.