Navigating the risks of potential tariffs
Your guide to managing the impact of new tariffs
The prospect of additional tariffs poses significant risks to the economy and global supply chains, particularly for industries reliant on cross-border trade. AFRY offers strategic support to help businesses develop robust contingency and action plans to mitigate these risks.
Understanding the Impact: a focus on Canada-US Trade
One example we examine is the potential impact of new tariffs on Canada-US trade, though our analytical framework can be applied to other key trade relationships, including US-EU, US-China and US-Brazil.
For Canadian mills, estimated tariffs could range from $200 to $250 USD per metric ton if a 25% tariff is implemented. While this tariff is currently on hold, it remains under review, and the risk of its implementation persists. If enacted, it could lead to price increases ranging from $85 to over $200 USD per metric ton. Given the critical role of Canadian pulp, paper, and wood products in US markets, businesses must evaluate the viability of alternative supply options and the broader implications for the industry.
Key questions to consider:
- Supply viability: How feasible are alternative supply options if tariffs are imposed? For instance, can Nordic mills deliver cost-competitive NBSKP to meet US demand? Are there viable alternative fibre sources?
- Market opportunities: Beyond traditional export destinations, which emerging markets or niche applications could offer promising opportunities for Canadian mills in light of shifting global demand trends?
- Pricing dynamics: How would new tariffs on Canadian imports affect pricing within the US market for both domestic and imported competing products? What are the potential long-term impacts on demand and pricing trends for US-based producers?
- Investment feasibility: With potential added tariffs, how might the return on investment (ROI) for new capital projects targeting the US market shift? What are the implications for the feasibility of such projects and for cross-border integrated manufacturing operations?
- Mitigation strategies: What scenarios should businesses consider to manage the impact of potential tariffs? How can companies assess the effects across the value chain and develop effective mitigation strategies?
How AFRY can help you stay ahead
Navigating the complexities of global trade requires proactive planning and informed decision-making. AFRY’s expertise can help your organisation assess risks, identify strategic opportunities, and develop tailored action plans to mitigate the potential impacts of new tariffs.
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