New tariffs imposed by the United States on certain Canadian goods are creating significant challenges for cross-border industries and prompting some companies to reconsider their manufacturing strategies. Experts say the measures, which cover a range of products including finished retail goods like shampoo and key industrial materials such as hardwood flooring, are affecting supply chains that had become deeply integrated between Canada and the United States.

Wolfgang Alschner, a business and trade law professor at the University of Ottawa, highlighted the extent to which North American industries rely on cross-border supply networks. He noted that tighter border controls and tariffs disrupt this integration, forcing states like Maine, which depend on Quebec suppliers for local industries, to reevaluate their partnerships. Alschner suggested the tariffs appear intended to disperse economic pain broadly, rather than targeting any specific market, even during politically sensitive periods such as closely contested Senate races.

However, other parts of the Canadian economy are expected to feel the tariffs more acutely. In particular, the hardwood flooring sector has faced heightened pressure since the U.S. introduced tariffs on Chinese and Vietnamese imports, leading those countries to divert exports to Canada. William Pellerin, partner and international trade group co-leader at McMillan LLP, explained that Canadian flooring manufacturers, primarily based in Quebec and Ontario, were already struggling to compete against low-priced imports before the recent tariffs. Many companies have relied on federal workshare programs to mitigate layoffs, with some workers operating reduced hours.

Despite these difficulties, Pellerin said restricting imports of overseas hardwood might be necessary to protect the Canadian industry over the long term.

Further complicating matters, Kyle Peacock, principal at Peacock Tariff Consulting, identified a trend of U.S. companies with Canadian manufacturing facilities shifting production back to American plants. The lip balm industry exemplifies this pattern; since the initial round of tariffs, five out of seven Canadian production sites have either ceased shipments to the U.S. or are planning relocations. One notable case is Eclair Lips in New Brunswick, which recently announced it would move its lip balm manufacturing to Vermont.

Peacock also pointed to Polyethics Industries in Orillia, Ontario, which recently announced 118 layoffs as it transfers production capacity to its factory in Antwerp, Ohio. The company produces polyethylene products, including garbage bags, now subject to tariff relief. Despite consulting from Peacock, the firm remains committed to moving remaining operations south of the border, citing other cost pressures such as rising diesel and transportation expenses influenced partly by geopolitical tensions involving the U.S. and Iran.

“Tariff relief won’t be enough to move the needle,” Peacock said, indicating that tariffs are only one factor amid a broader array of challenges motivating companies to reshore production within the United States.