Tariff tensions heat up

Luke Wilson (0:00)

The trade war between Canada and the US steps up a gear. It's World Business Express from the BBC World Service. I'm Luke Wilson.

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Canadian tariffs on a range of American goods worth around $20 billion have come into effect after trade talks between the two countries collapsed last month. Donald Trump slapped 50% tariffs on products including cement and hockey sticks following those talks. Canada responded by matching the tariffs, quote, dollar for dollar. Here's Canadian Finance Minister Francois-Philippe Champagne.

Francois-Philippe Champagne (0:48)

This is an unprecedented challenge imposed on Canada. But Canada will meet the moment.

Canadians will meet the moment. And as the Prime Minister has said, we will support our workers, our businesses and our industry with whatever it takes for as long as it takes.

Luke Wilson (1:08)

So where does this leave American businesses? Earlier, I spoke to Scott Embodin, Chief Operating Officer of Natural Choice, Ohio's biggest family-owned dairy business. And I asked him what this trade war means for him.

Scott Imboden (1:21)

We buy some machinery from Canada. In the last year, we've seen our vendors not really know how to plan for those potential tariffs, and went ahead and of course added them where they were by law required to. And it added about 20 to 30 percent on top of a piece of equipment that was already costing, let's say, $300,000.

So those are things we were not expecting. Another impact is the potential feed tariff. Last summer in 2025, overnight, we learned about a potential tariff on an input feed. It was later determined that those products were exempt. Of course, there was a lot of uncertainty.

We were really kind of exposed in the future months there with regard to price. You've seen our diesel prices this year on the farm are more than double what they were this time last year. And there's only so much risk mitigation you can do with certain types of inputs.

Luke Wilson (2:20)

Yeah, and how challenging is the tariff situation, the trade situation? How hard is it to run your business?

Scott Imboden (2:28)

It is no doubt frustrating because we have had to kind of overnight change our thinking on where we're going to be purchasing our assets, the pieces of equipment that we use to run our business day to day.

You know, we have several million dollars worth of equipment that are always running around 24 hours a day, as you can understand in the dairy business. It's affected really where we're thinking about sourcing some of our equipment that used to come from overseas. And I think maybe that was the intention of the administration to begin with, is to sort of force people or strongly reconsider to purchase those items that are made in the United States.

Luke Wilson (3:05)

And all of this feeds through to prices, doesn't it? Obviously, you're a businessman running a business, but you're also someone who goes to the store to buy food. Are you seeing that impact?

Scott Imboden (3:17)

Absolutely. Our employees are feeling it, too, of course, with the dairy industry, particularly in the United States.

We always say that we are kind of price takers, not price givers. And so our, our end product that we sell, our raw milk, of course, is set by the Chicago Board of Trade, or at least it is guided by that. And so just because a tariff will increase our price or our cost of production, let's say by five or even 10 percent, we do not get the opportunity to go directly to our end consumer, who drinks the gallon of milk to say, hey, I need 10 or 15 percent more.

Luke Wilson (3:53)

Scott Imboden, Chief Operating Officer of Natural Choice Family Farms. Listening to that is Fiona Sincotta, Senior Market Analyst at Stonex. And Fiona, President Trump also threatening to stop Canadian-made Bombardier jets been sold into the US. Has there been any market reaction to that?

Fiona Sincotta (4:10)

Yes, there has in fact. So this is one of Canada's largest companies whose share price is down around 6% following the announcement by Trump and sort of obviously comes amidst the escalating trade war between the two neighbors. Bombardier does actually already have some factories in the US, but it's also unclear how Trump would intend to actually block the company from doing business in the US.

Luke Wilson (4:35)

And elsewhere, Fiona, oil prices have been steadily climbing in recent weeks with the US and Iran exchanging strikes again. Where are we now?