US ban on Canadian exports comes into effect

Leanna Byrne (0:01)

The US says, No Canada has banned its neighbors' alcohol and dairy imports. It's World Business Express from the BBC World Service. I'm Leanna Byrne. Price rises in Spain, unexpectedly hit 5% and why the aura ring maker is delaying its IPO.

In the US., a ban on nearly a billion dollars worth of Canadian imports has now come into force. Most Canadian alcoholic drinks, some dairy products and motorcycles are among the goods that can no longer be imported into the United States. It's the latest escalation in a trade dispute that has seen Washington impose tariffs on Canadian goods and Ottawa retaliate with tariffs of its own. Ron Kubek is owner and CEO at Lightning Rock Winery in British Columbia, who's been directly hit by the latest ban.

Ron Kubek (0:50)

We lost over 10% of our sales immediately to the net states. The other issue is that the retaliatory tariffs, Canada is one of only two countries in the world to put retaliatory tariffs on, are actually affecting me as much if not more. So I've lost sales revenue. And now with the Canadian government taxing me on the tariffs, you know, we don't make John Deere tractors in Canada. So all my parts have to come from the US. I'm picking up shipping material this morning for our wine club going out, and it's a 50% increase. And so Canada, instead of trying to figure out how to negotiate, is playing this tit-for-tat game in terms of charging new tariffs. And the thing that people don't realize is that tariffs are paid by businesses like myself and consumers.

Leanna Byrne (1:36)

So this ban on imports, which includes alcoholic spirits and some dairy goods in the US. So that's just kicked in, hasn't it? Have you seen any effects so far?

Ron Kubek (1:47)

Well, my rep in Washington state said, you know, after the tariffs, he said, we could live with 25% tariffs into the US. He said, we can't live with the US ban. It's teaching us, okay, how do we pivot in terms of what's going on? And it's a shame because we had really started to build that business up. We were focused on having that be over 25% of our business as a growing winery. You know, we've got people all over the states that want our wine, but they can't get it right now.

Leanna Byrne (2:13)

It's probably also a lot harder when you're having to cross an ocean to do trade deals or to build a business further to reach place.

Ron Kubek (2:23)

Yes. We had always started looking afar.

Canada has a free trade agreement with South Korea. We had started talking to somebody there, but that died when Canada chose German submarines instead of the South Korea submarines. I didn't realize also owning a small winery in Summerlin died to be involved in world politics. The US is the largest market in the world. It's right next door. It takes me about an hour and a half to get down to the US border, so it's very close. And losing that market, taking a look at what is shipping going to be if we get into London. What's the shipping across Canada? It was cheaper for me to go into Washington state with transportation and the tariffs under the KUSMA or the NAFTA or USMCA, whichever way they want to work it, than it is to going to some other provinces.

Leanna Byrne (3:08)

That was Ron Kubeck, owner and CEO at Lightning Rock Winery in British Columbia. Let's hear from Kathleen Chapman. She's the president of a Vanco Limited department paper company headquartered in Ontario, and she's dealing with the effects of the previous tariffs.

Kathleen Chapman (3:21)

Half of our product line is labelled made in France, converted and packaged in Canada because we source our product from France. So that immediately has been under a 15% tariff for the last two years, roughly, I believe, when the EU tariffs went into effect. And we are currently launching a new larger line of baking cups and air fryer liners that are made in Canada, which means they're immediately going to be impacted by 50% tariff. So our ability to export into the US is pretty much shut down at this point. So we have worked really quickly to pivot our products to the Canadian market. And that has become our sole focus at this point and for the foreseeable future.

Leanna Byrne (4:08)

Jacob Jensen is the Director of Trade Policy at the American Action Forum, the centre right think tank in Washington DC. He says these tariffs will hurt both countries.

Jacob Jensen (4:17)

The trade war as a whole is hurting both sides of the border. It's raising costs for US businesses which import some Canadian products as inputs for their businesses or they resell it to American consumers. And it's raising costs for the general American consumer as businesses pass on these additional costs to them to pay.