Question Period Note: Tariffs Impacts in Southern Ontario and Regional Tariff Response Initiative

U.S. Tariffs Impacts in Southern Ontario

• Unjustified tariffs and trade disruptions are affecting businesses and communities in every part of southern Ontario.
• The region is at the frontline of this trade dispute, with steel and automotive producing sectors being particularly hard hit.
• Canada’s new government is building a new industrial strategy to meet this moment and transform our economy to be more resilient to global shocks. This includes over $362 million for impacted southern Ontario businesses and communities through the Regional Tariff Response Initiative delivered through FedDev Ontario, an initiative that includes dedicated support for the steel sector.
• We are moving swiftly with laser-focused investments to protect businesses, strengthen resiliency, and build the economy of the future.

• The United States has adopted a protectionist stand on trade, announcing a number of tariffs on several goods from multiple countries. Currently, Canada faces tariffs of 35% on non CUSMA-compliant goods, 25% on the non-U.S. content portion of vehicles and parts, 50% on steel and aluminum, 50% on copper, and 10% on non CUSMA-compliant energy and potash.
• The Government of Canada is helping Canadian businesses respond to global trade pressures. The Regional Tariff Response Initiative (RTRI), delivered by Canada’s regional development agencies (RDAs), is part of the broader Government of Canada tariff response plan that includes $6.5 billion in new measures to protect Canadian businesses and workers.
• The RTRI is a three year, $1-billion national initiative delivered by regional development agencies (RDAs) to enable businesses to open doors to new markets, boost productivity, and strengthen domestic supply chains. At least $150 million of the national RTRI allocation will be dedicated to businesses in the steel sector. Here in southern Ontario, FedDev Ontario has been allocated over $362 million to help businesses to respond, adapt and compete amid shifting market conditions.
• FedDev Ontario is prioritizing RTRI support for industries most affected by tariffs, including the steel and automotive sectors. These industries remain particularly vulnerable as shifting tariff regimes continue to disrupt supply chains, increase costs, and create significant market volatility, making targeted government support critical.
• To maximize the impact of RTRI funding, FedDev Ontario is actively engaging with its broad network of automotive stakeholders, including industry associations, original equipment manufacturers (OEMs), SMEs across the supply chain, and other government organizations. The Agency is delivering on its objective to raise awareness of available funding opportunities and to encourage applications from firms that could benefit from productivity-enhancing projects, modernization initiatives, or diversification efforts. Automotive supply chain firms, particularly small and medium-sized enterprises (SMEs), continue to face significant uncertainty as tariff pressures disrupt operations and compound existing industry challenges. With many of these firms constrained by limited resources and unable to absorb sudden cost increases, RTRI funding can play an essential role in helping them strengthen resilience, invest in innovation, and remain competitive contributors to Canada’s automotive sector.
• Ontario-U.S. trade totals ~$450 billion annually, with Ontario being the top Canadian exporter to over 30 states. However, the trade war is impacting this as between April-May 2025, Ontario exports to the U.S. were down $5.7 billion compared to April-May 2024. Trade with the U.S. supports up to 1 in 5 Ontario jobs, driving regional GDP and prosperity.
• Many businesses and supply chains have organized themselves across borders given the history of trade agreements in North America and the opportunity to tap into regional advantages, such as cheap labour. This deep level of integration has meant that tariffs have caused businesses to struggle, facing fewer orders and necessitating layoffs. In 2024, Ontario exported:
o $195 billion worth of merchandise to the U.S. (77% of all Ontario exports).
o $178 billion worth of manufacturing products to the U.S. (91% of Ontario’s exports to the U.S.).
o $62 billion worth of autos and parts to the U.S. (96% of Ontario’s total autos and parts exports).
o $10 billion worth of steel and aluminum products to the U.S. (96% of Ontario's total steel and aluminum exports).
• In 2018, the U.S. applied a 25% tariff on Canadian steel and a 10% tariff on aluminum. During that period, Regional Development Agencies supported the sector and intensive users of steel and aluminum through the RDA REGI Steel & Aluminum Initiative (SAI). Under the SAI, FedDev Ontario provided $39 million to 81 projects, helping SMEs increase their competitiveness. The initiative allowed for non-repayable contributions of up to $1 million, leveraged around $2.0 for every dollar invested by the Agency, and SME recipients in the region reported the creation of 309 jobs and maintenance of 972 jobs. This is addition to the more than $100 million the Agency has provided to the steel sector through its ongoing programs since 2015.

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