An upcoming workshop aims to help North Okanagan businesses adapt to the many challenges imposed by U.S. tariffs.
On Tuesday U.S. president Donald Trump followed through on his threat to impose 25 per cent tariffs on Canadian exports and 10 per cent tariffs on Canadian energy. The tariffs came into effect March 4 following a 30-day pause. Canadian Prime Minister Justin Trudeau also announced retaliatory tariffs on U.S. exports coming into effect at the same time.
The trade war between the two countries is now officially underway, which poses a myriad of questions regarding how local businesses can move forward.
To help businesses navigate these challenging times, Community Futures North Okanagan hosted an online webinar, titled Growing Your Market in Times of U.S. Tariffs, on Feb. 27. The workshop will be repeated in an in-person setting on March 12.
It is led by Amber Piche and Raeanne Anderson, a pair of export advisors under the Export Navigator program in the Thompson Okanagan region. Export Navigator is a federally and provincially funded body that works with B.C. businesses to help them expand and export outside of B.C. borders, whether internationally or to other Canadian provinces.
"There are a lot of reasons why a company should export, but primarily it's to diversify markets, develop business resiliency and seek new innovations," Piche said.
The goal of the seminar is for business leaders to become conscious of different types of business risks and how to mitigate them, understanding the cultural, economic and political factors that can influence markets, learning the importance of market research and analysis for successful exporting, and hearing practical advice on how to make decisions.
The organizers say it isn't necessarily about finding alternative markets to the U.S. markets in light of the tariffs. Rather, it is about about making an unbiased decision on what is the best market for a given business to compete in, "and the U.S. might still be the right market," Piche said.
Piche said a tariff is an example of a market risk, adding market risks are a reality of doing business in the world and there are plenty of them. Other market risks include misjudging the market demand, or failing to understand local consumer behaviours.
Anderson points to the COVID-19 pandemic as another time when local markets and supply chains were drastically affected.
"Think about how gyms were shut down and the demand for home exercise equipment went up," she said.
Speaking before the tariffs came into effect, Anderson said there is "a lot of fear regarding what is going to happen or not going to happen, and just the overall perceptions of the products that are out there."
One cause of concern was the potential for Trump to scrap the de minimus exemption that is in place for products crossing the Canada-U.S. border. The de minimus is currently set at $800, and if the value of goods coming across the Canada-U.S. border is under that amount, it is not subject to GST or duties. Trump so far has not gotten rid of the de minimus, though there has been speculation that he might do so eventually.
Piche said if that happens it would essentially halt trade, because there would suddenly be a firestorm of paperwork required to move "the smallest package" across the border "that it's going to be a nightmare." The consequences of scrapping the de minimus has her thinking it's not going anywhere.
Anderson added that the Trump Administration's gutting of the federal workforce would make it even more unfeasible to get rid of the de minimus.
"Who is going to be doing this work? Putting that cap of $800 allowed for more streamlined entry. If that goes away, you need more people to process that paperwork and procedures," Anderson said. "So that's why we're kind of waiting to see what's going to happen."
The workshop touches upon a number of key considerations for businesses looking to export in light of the tariffs that are now in place.
"Are we ready to export? Do we have the capacity to export? If we were to get a sale of a pallet of our product tomorrow, can we handle it? Can we actually produce that product in a timely fashion and fulfill that scale? If we're a service company and we get one thousand hours tomorrow, can we facilitate one thousand in a service model?" were some of the questions Piche posed.
Anderson put forward further considerations to ponder if looking to export to other countries, such as where the country is located, what its population is, and what languages are spoken there.
She used several examples of companies that failed to consider these questions.
One was when Colgate tried to enter the Argentinian market, but failed to realize that "Colgate" in the local Spanish dialect translates to "hang yourself." The products flopped initially as a result.
Another example was when Ford marketed its Pinto model in Brazil, without realizing that "Pinto" is slang in Portuguese for "tiny male genitalia."
The workshop takes participants through an exercise in building an export plan using spreadsheets, which account for a number of factors to consider when trying to find the right market for a product.
One such factor is government stability, and the workshop explores whether this factor is always relevant when choosing a market.
"Sometimes government stability is going to be important, sometimes it's not," Piche said. "If you're selling a medical device, will government stability affect the need or use of that medical device or is it completely arbitrary?"
Piche said there is "no magical answer" her team can give business owners who are fearful of the impact of U.S. tariffs, but the workshop aims to help businesses drill down on potential solutions.
The March 12 in-person workshop is taking place from noon to 1 p.m. at Community Futures North Okanagan's office, 3105 33rd St. The workshop is free but space is limited. To register, visit Eventbrite.
