A tariff can do more than increase the price of imported goods. It can make businesses hesitate before building factories, expanding operations or committing millions of dollars to projects that might take years to become profitable. That uncertainty is now becoming one of the biggest concerns in the ongoing trade dispute between Canada and the United States.
Canada’s ambassador to Washington, Mark Wiseman, delivered that warning on November 11, 2026, arguing that President Donald Trump’s tariffs are making investment more expensive and discouraging business expansion on both sides of the border. Speaking to international business leaders, Wiseman emphasized that unpredictable trade policies create financial risks extending well beyond customs duties. His remarks come as both countries attempt to restore confidence in a trading relationship supporting billions of dollars in commerce, extensive industrial supply chains and millions of jobs.
Ambassador Mark Wiseman Warns That Uncertainty Is Becoming a Financial Burden
Wiseman’s warning carried particular weight because he has spent much of his career managing investments. Before becoming ambassador in February 2026, he held senior roles at the Canada Pension Plan Investment Board and BlackRock. At the B20 summit in Washington on November 11, he drew on that background to explain why unpredictable trade rules can be as damaging to investment plans as the tariffs themselves. “Uncertainty increases your cost of capital,” he told the gathering, which was hosted by the U.S. Chamber of Commerce.
His examples were deliberately practical: a company considering a new factory, additional shipping capacity or research spending needs confidence about the rules governing its future sales. A project that looks profitable under stable conditions may become harder to finance when costs could change without warning. Wiseman urged Washington to remove tariffs imposed under Sections 232 and 338 of U.S. trade law. His point was not that every planned investment has been cancelled, but that uncertainty makes committing money more difficult.
2. Higher Financing Costs Are Making Business Expansion More Difficult
The cost of capital is the price a business pays to obtain money for investment, whether through borrowing or by attracting shareholders. When trade policy becomes unpredictable, lenders and investors may demand greater compensation for risk. Companies can also respond by postponing purchases, preserving cash or choosing smaller projects. That means a tariff dispute can affect investment even before a shipment crosses the border. For an employer planning to expand a plant, a delay may also mean putting recruitment and equipment orders on hold.
The Bank of Canada has documented similar behaviour. Its third-quarter 2026 Business Outlook Survey found that longer-term trade uncertainty was restraining some capital spending, although investment intentions overall remained relatively robust. Responses collected after Canada–U.S. negotiations broke down in August showed renewed pressure on investment plans, export expectations and business sentiment. Some firms reported waiting for clearer conditions before committing funds. This distinction matters: businesses were still investing, but tariff uncertainty was changing where, when and how much.
Trump’s Expanding Tariffs Are Creating Different Rules for Canadian Industries
Not every Canadian product faces the same U.S. tariff, which makes the dispute unusually difficult to navigate. Section 232 measures target strategic sectors, including steel, aluminum and automobiles. Separate Section 338 measures introduced in 2026 imposed 50% duties on specified Canadian goods, including categories of machinery, furniture, plastics and wood products. Unlike many other tariffs, those Section 338 charges can apply even to merchandise that qualifies under the Canada–United States–Mexico Agreement. Washington has also modified product lists and allowed some duties to be added together.
The distinction is important for a manufacturer preparing a cross-border quotation. A shipment of industrial machinery may encounter very different customs treatment from a shipment of energy products, and eligibility can depend on detailed classifications. The Bank of Canada estimated in October that around 80% of Canadian goods exports to the United States still entered tariff-free. That leaves a significant exposed minority, however, and uncertainty about future changes complicates decisions even for businesses not currently paying duties.
American Manufacturers Are Also Exposed to Rising Cross-Border Costs
The Canada–U.S. manufacturing relationship is built around components moving between businesses, not simply finished products crossing a border once. Statistics Canada estimates that Canadian production of exports destined for the United States in 2024 required C$118 billion in imports from American suppliers. Canadian manufacturers shipped C$324 billion in goods south that year, with more than one-quarter of that value reflecting imported U.S. content. The figures show why a tariff aimed at Canadian production can also disrupt businesses supplying parts from American factories.
Consider a U.S. component maker selling to a Canadian manufacturer that later ships a finished item back to an American customer. Higher border costs may squeeze the Canadian buyer, weaken demand for the U.S. component or increase the final selling price. The precise outcome depends on contracts and competition, but the exposure crosses national lines. This is the practical foundation of Wiseman’s argument: making Canadian exports costlier does not automatically protect every American company in the supply chain.
Canada’s Auto Industry Faces Serious Risks From Continued Tariff Uncertainty
Few industries illustrate cross-border dependence more clearly than automotive manufacturing. Statistics Canada estimates that U.S. demand supported 76.4% of payroll jobs in Canada’s automobile and light-duty vehicle manufacturing industry in 2024, equivalent to roughly 27,000 jobs. Canadian motor vehicle exports to the United States then fell 9.6% in 2025. That decline cannot be attributed entirely to tariffs: Statistics Canada also cited production retooling and semiconductor shortages. Auto parts shipments to the U.S. actually increased that year, showing how differently companies can experience the same trade environment.
Current U.S. Section 232 rules generally impose a 25% tariff on covered cars and trucks, while excluding the U.S.-made content of qualifying vehicles. The calculations matter when manufacturers decide where to assemble their next model or source a component. An assembly plant in Ontario can rely on suppliers in Michigan or Ohio, just as American vehicle factories rely on Canadian components. Higher costs or shifting rules can therefore reshape investment plans and employment across the entire corridor.
More Than $1 Trillion in Canadian Investment Highlights the Stakes
The stakes extend well beyond the next shipment because companies already have enormous amounts invested across the border. Statistics Canada reported that Canadian direct investment in the United States stood at approximately C$1.20 trillion at the end of 2025. Direct investment from U.S.-based immediate investors in Canada totalled C$737.3 billion. These figures represent accumulated investment positions, not money invested in a single year, but they underline how deeply the two economies are connected through ownership, facilities and long-term business relationships.
The data also offer a useful caution against assuming investment has stopped. Total foreign direct investment held in Canada increased 6.9% in 2025, while U.S. investors increased their positions in the country. At the same time, the value of Canadian direct investment held in the United States declined slightly. Exchange rates, acquisitions and other factors influence those changes. Wiseman’s concern is narrower and forward-looking: uncertainty can make the next factory expansion, technology upgrade or acquisition harder to justify, even when existing investments remain substantial.
Canada’s Budget Watchdog Warns of a Potential 185,000-Job Impact
Canada’s Parliamentary Budget Officer has put numbers around the broader economic risks. In an October 2026 assessment, the office estimated that trade measures introduced since early 2025 could leave Canada’s real gross domestic product 1.4% lower after five years than under a scenario preserving the pre-tariff trading relationship. If the measures remain permanent, its modelling suggests employment could be as much as 185,000 jobs lower at the peak of the impact. These are conditional model estimates, not a count of jobs already lost.
The consequences would not be distributed evenly. The budget office identified automotive production, steel, aluminum, forestry, plastics and manufactured goods among the industries most exposed. A community built around a mill or a parts plant can feel a cancelled equipment order through suppliers, local contractors and household spending. Yet the office also noted that businesses are adjusting, and actual exports have sometimes performed better than its tariff-only model implies. That uncertainty cuts both ways: the risks are substantial, but the outcome is not predetermined.
Federal Reserve Research Shows American Consumers Are Paying More
Higher duties do not stay neatly at the border. Research by economists at the Federal Reserve Bank of New York found that nearly 90% of the 2025 U.S. tariff increases were reflected in prices paid by American importers. Their analysis also estimated that roughly 26% of a tariff increase ultimately passed through to consumer goods prices. Those percentages describe different stages of the pricing process and should not be confused: a tariff collected from an importer is not automatically passed in full to a shopper.
The researchers found that imported products accounted for most of the retail price effect, but U.S.-made goods also became more expensive. Domestic manufacturers sometimes paid more for imported inputs, while competitors facing higher-priced imports had room to raise their own prices. Those indirect effects took longer to develop, often unfolding over nine to twelve months. For an American household shopping for appliances or a contractor buying supplies, the financial effects can arrive gradually, long after the original tariff announcement.
Canada–U.S. Trade Remains Enormous Even as Businesses Seek Alternatives
Even under pressure, Canada and the United States continue to exchange extraordinary volumes of goods. U.S. Census Bureau figures show approximately US$570.4 billion in two-way merchandise trade during the first nine months of 2026. But the longer comparison reveals strain. On a Canadian customs basis, exports to the United States fell 5.3% in 2025 to C$564.6 billion, according to Global Affairs Canada. The U.S. share of Canadian merchandise exports declined from 76.3% to 72.5% that year.
Some businesses are responding by seeking customers elsewhere rather than waiting for an agreement. The Bank of Canada’s 2026 business consultations found firms changing suppliers, investing in automation and exploring markets outside the United States. Global Affairs Canada reported stronger Canadian exports to several non-U.S. regions in 2025, although gold prices and energy shipments were important factors. Diversification can reduce reliance on one buyer, but it requires time, logistics and new commercial relationships. It cannot quickly replace an integrated continental market.
Renewed Trade Negotiations Could Determine the Next Wave of Investment
Diplomacy now matters because even a limited agreement could give businesses a clearer basis for planning. Reuters reported in October that Canadian and U.S. officials were discussing relief from Section 232 duties on steel and automobiles after broader talks collapsed in August. Canada and its partners also began the scheduled review of the Canada–United States–Mexico Agreement in July. The agreement remains in force until 2036 unless its terms change, but sector-specific tariffs have complicated the predictability companies once associated with North American free trade.
Washington argues that its measures defend American producers against what it describes as discriminatory Canadian policies affecting vehicles, dairy and alcohol. Ottawa disputes important elements of that case and is seeking tariff relief. Wiseman’s appeal focuses on a shared economic interest rather than declaring either side victorious. For investors, the decisive test will be whether negotiators produce rules stable enough to support projects that take years to build. Until then, hesitation itself remains an economic cost.
