Canadians are bracing for February 1, the day President Trump has threatened to unleash sweeping 25% tariffs on imported Canadian goods. Since Trump has been erratic in the issuing and retracting of his edicts, it’s not known whether he will actually follow through on the imposition of tariffs on Saturday or if there will be a delay. Though as late as yesterday, he told reporters he’s not backing down.
Canadian businesses have been preparing for the tariffs since they were first announced but so has the federal government, which is expected to respond with tit-for-tat tariffs. That means prices of goods will rise on both sides of the border. Reciprocal tariffs could include tariffs on U.S. media, magazines, movies and digital streaming platforms, resulting in higher subscription costs and pricier trips to the theatre for consumers.
Andrea Hunt, president and CEO of the Association of Canadian Advertisers (ACA), says that even the mere threat of a trade war introduces a heightened level of uncertainty, compelling businesses to reassess their financial strategies, including discretionary spending. “While the need to support businesses remains, media could possibly be affected. There is also the complexity of navigating fluctuating costs, potential shifts in regulations, currency fluctuations, and the potential for supply chain disruption – all factors that complicate financial planning and execution.”
She adds that sectors most at risk include those that rely heavily on global supply chains and international trade but many sectors will feel the impact on some level. “However, the ripple effects of trade instability will likely be felt across virtually all sectors, influencing everything from procurement to consumer confidence. As a result, many prudent advertisers have adopted scenario planning in collaboration with their partners to remain agile as they look to mitigate risks and seize opportunities amidst the volatility.”
“Tariffs will bring uncertainty and challenges, potentially impacting client businesses, marketing budgets, and the broader media landscape,” Simon Ross, VP strategy and insights at Horizon Media, says. “While the full effects remain unclear, potential shifts, such as potentially higher media rates, could create hurdles for Canadian-based agencies. However, this moment also presents an opportunity to invest in local news and strengthen Canadian media. Change is never easy, but it can spark innovation and resilience, paving the way for a more sustainable industry.”
Looking at just some of the products that are imported into this country from the U.S., Canadians can expect to pay more for everyday items such as breakfast cereals, fruits and vegetables, cosmetics, cars, gas and oil. Increased prices will have a domino effect that will begin with marketers, their ad budgets, and then roll out into Canada’s advertising and media industry.
Devon MacDonald, president of Cairns Oneil, says that for clients that have goods crossing the border, there is obvious concern about the potential impact that tariffs or a trade war could have on their pricing. This is especially true of manufacturers with complex supply chains. “The broader concern though is what the impact could be on the economy overall and the impact to consumer spending. Even with the recent prime rate decrease and ease on inflation, consumers are under tremendous financial strain that tariffs will propagate. This decrease in spending of course would reduce the demand for goods and reduce budgets in media. This could cause a reduction in media prices.
“We see the Digital Services Tax as being a part of the broader discussion too. The taxing of U.S.-based companies for revenue earned in Canada was always going to be a USMCA issue, which will be accelerated by tariffs. It may be a negotiating point to change or eliminate the DST program to focus more on consumer facing issues. This would have a positive effect on media and put more working dollars back into the ecosystem for clients,” MacDonald adds.
More to come as the story develops.
