Global tariffs gave Canada unexpected advantage. How Trump's pause narrows Windsor's silver lining

For seven days, companies in countries all over the globe scrambling to find somewhere to build products that avoided U.S. President Donald Trump's reciprocal tariffs were looking at Windsor-Essex, Ont.

A manufacturing hub with a large cluster of tool and die makers. The area is known for its strong ties to America's automotive industry and its ability to make the machines that make those parts. 

When Trump initially announced tariffs ranging from 10 to 46 per cent on goods imported to the U.S. it gave Canada a leg up against the competition.

"It also created a situation that Canada is now potentially in an advantageous position relative to other countries around the world," said Ryan Donally, president and CEO of the Windsor-Essex Chamber of Commerce.

Trump has slapped tariffs on goods entering the U.S. from Canada, but that rate is set at 25 per cent for things that don't fall under the Canada-United States-Mexico Agreement (CUSMA).

There's no tariff for CUSMA compliant items, outside of steel, aluminum and the non-U.S. content of Canadian-made passenger vehicles.

A company manufacturing something in Taiwan and importing the goods to America gets slapped with a 32 per cent tariff. 

Canada's lower tariff, by comparison, created a new equation for companies to consider in the production of goods for the American market. 

On Wednesday morning, Donally said Windsor companies were taking calls from American purchasers exploring those options. 

"The folks I was chatting with at the trade task force table are seeing ... American purchasers really dipping their toes in the water testing what the cost of product might look like coming from Canada versus other countries."

But a few hours later, with the stock market experiencing a near record slide, Trump put a 90-day pause on the Liberation Day tariffs and put down a 10 per cent baseline tariff for more than 75 countries instead. 

Now, an American purchaser would be looking at a 10 per cent tariff on goods imported from Taiwan or a potential 25 per cent tariff on a non-CUSMA compliant good from Canada.

"We were in this privileged position where because of our free trade agreement we were the only two countries on earth that could be in a situation to have products that didn't actually attract a tariff," said Joy Nott, a partner with KPMG, a tax and audit advisory services company with 30 years of experience in trade and customs. 

"But what happened today actually puts us back on our back heel."