Recently, President Trump announced plans to move forward with the tariffs on Canada and Mexico that he had previously announced a one month pause on. With Canada and Mexico being the US’s two largest trade partners, these tariffs will have drastic impacts.
In this article, we’ll discuss the details of these tariffs, their likely impacts, and how partnering with Veryable can help businesses turn these tariffs into a catalyst for growth.
If you're looking for information on other tariffs, check out these articles:
Previously on February 1st, President Trump signed three separate executive orders under the International Emergency Powers Act (IEEPA) to add new tariffs on goods from Mexico, Canada and China.
On February 3rd however, Trump announced a one month pause on the tariffs to Canada and Mexico. This decision took place shortly after conversations with Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau, who both pledged additional resources to help curb the flow of illegal immigrants and drugs like fentanyl at their respective borders with the US. The tariffs on China however have already gone into effect.
Nonetheless, in a press conference on February 24th, Trump stated that he will be moving forward with the tariffs, and early on February 27th that they will take effect on March 4th. He also threatened to double the tariffs on China, but we won’t cover that in this article. The rationale for these tariffs is that Canada and Mexico are taking advantage of America, and that these tariffs will help fix the trade imbalance.
When they go into effect, products from Canada and Mexico will have a 25% tariff. Energy resources from Canada will have a lower 10% tariff.
With more than 25% of all imports to the U.S. coming from Canada and Mexico , these tariffs will have far-reaching impacts. Among all the sectors hit by new tariffs, the US auto sector stands out as the most likely to be disrupted, as decades of free trade have caused the US, Canadian, and Mexican automotive industries to be highly integrated. For context, in 2024 the U.S. imported some 3.6 million light vehicles from Canada and Mexico, representing 22% of all vehicles sold in the U.S., according to S&P Global Mobility. Additionally, given the flow of automotive components across borders, even vehicles produced in the U.S will be impacted by these tariffs.
With goods from Canada & Mexico becoming more expensive due to these tariffs, consumers will shift toward domestic alternatives, which will greatly benefit U.S. manufacturers and distributors. The problem is, with the U.S. relying so heavily on foreign goods for the past few decades, there isn’t nearly enough domestic production of commonly imported goods to meet demand.
This presents both challenges and opportunities. Those who can quickly increase production capacity will be able to aggressively go after new volume and grow their market share. But this is much easier said than done. Increasing capacity typically means increasing investing in new equipment, additional full-time employees, and potentially even new facilities. Not only do all of these options take months to implement, but they can be incredibly risky - even in a perfectly stable economy, it can take years to see a return on investment. Not to mention that small & medium sized manufacturers, which make up the vast majority of the sector, typically can’t afford large investments into additional FTEs, expensive automation, or facility upgrades. This could mean disaster, because If these smaller companies can’t quickly and efficiently increase production capacity, larger competitors who actually can afford massive upfront investments will snatch up all the available market share and run them out of business.
Additionally, manufacturers who have previously outsourced operations to Canada and Mexico, particularly automakers, will need to evaluate opportunities for reshoring. As previously mentioned, the US, Canadian, and Mexican automotive industries are highly integrated, and components often cross borders multiple times before becoming finished products. For example, in the production of a Chevy Silverado or Dodge Challenger, parts can travel between the U.S., Canada, and Mexico several times. A 25 percent tariff at each crossing quickly snowballs into significant cost increases, making manufacturing in tariffed markets prohibitively expensive and significantly driving up costs for consumers. With the average price of a new vehicle already within striking distance of all-time highs, any cost increases passed off to consumers will significantly reduce demand.
This is why VW Group has announced they are considering expanding their Chattanooga, TN manufacturing facility (which currently produces the ID4, Atlas, & Atlas Cross Sport SUVs) to include Porsches and Audis. While these changes would take years to implement, and possibly longer if any new vehicles are added to the production schedule (like Porsches which would require significant facility upgrades), this would be a huge win for the State of Tennessee, as it would directly create thousands of jobs while boosting numerous other industries. Apple also announced similar plans, stating that they will invest $500B over the next few years to build and expand several manufacturing plants in the U.S.
Lastly, it’s important to keep in mind that these tariffs could lead to retaliation from Canada and Mexico. If this happens, U.S. exports will be less competitive in these markets, meaning domestic producers will need to scale down to control costs and stay profitable. To prepare for this without sacrificing their ability to capitalize on emerging growth opportunities, businesses need to stay agile and able to quickly pivot at a moment’s notice.
Enter Veryable.
With Veryable, businesses can quickly and efficiently scale up to meet rising demand for domestic goods without having to spend weeks going through the time consuming and costly process of recruiting, screening, hiring, and training new employees that might not even be needed everyday.
Compared with direct hiring or temp staffing, with Veryable, businesses can find workers with only 1-2 days of lead time, and maintain full control over worker selection. For each of the more than 700k thoroughly vetted and ready to work operators on the Veryable platform, businesses have access to a “live resume” that shows:
Together, these features ensure that businesses can confidently select workers who are ready to hit the ground running. And in the event a Veryable operator doesn’t meet productivity standards, businesses can rate them accordingly and bring a different one in the next day. With direct hiring or temp staffing, this simply isn’t an option. If you hire someone that doesn’t live up to your expectations, it will likely be weeks until you can find a replacement and run them through the onboarding process. With the labor supply already contracting due to Trump’s crackdown on illegal immigration and everyone competing for the same workers at once, this will be even more difficult than normal. If business is booming, you might just have to bite the bullet for the time being and hope that they don’t make any major blunders. Otherwise the rest of your team will be working excessive overtime until you find a suitable replacement. This isn’t good for your bottom line or morale. Not to mention that it leaves the door open for better prepared competitors.
Furthermore, this approach helps businesses create down cycle agility and build a layer of resilience into their operations. As previously mentioned, if Canada and Mexico attempt to issue retaliatory tariffs, this could reduce demand for U.S. exports. With Veryable however, businesses can scale down instantly without the need for layoffs. Not only does this help minimize fixed labor costs, but it means when demand rises again, businesses can scale right back up again instantly without having to go through the hiring process all over again. This provides a massive competitive advantage, because at the end of the day, those who can react the fastest to changing market conditions achieve the greatest outcomes.
In addition to the benefits of operational agility and quick pivots, another advantage of the Veryable solution is that businesses only pay for work once it’s completed. While we feel strongly that preparation is a driver of profit and that it’s best to build the ark before the flood, smaller businesses in particular may not have the capital to increase workforce capacity before the need arises. With Veryable, these businesses don’t have to worry about this and can find the help they need just a day or two in advance at zero cost to scale. Again, we don’t recommend that businesses wait until external circumstances force them to react. The companies that will succeed in the coming months view preparation not as a cost, but as a strategy that makes them more profitable now, and resilient in the face of what’s to come.
With the U.S. being so dependent on imports from Canada and Mexico, these tariffs will send shockwaves across the economy when they take effect on Tuesday, March 4th. Those who have outsourced parts of their operations to tariffed markets will need to quickly pivot and start the process of reshoring if they plan on remaining competitive.
Domestic producers on the other hand, will need to rapidly increase production capacity to capitalize on the growth opportunities that will present themselves in the coming months. Veryable can help businesses do so quickly and efficiently, without the red tape, upfront costs, inflexibility, or risks associated with traditional approaches.
As we’ve said before, “the cost of inaction is always greater than the cost of preparation". The best time to build resilience and agility into your operation was before the crisis. The second-best time is now.
If you haven’t already built your labor pool, you can get started by either creating your free business profile or contacting your local team. If you'd like to learn more about other impending tariffs and how Veryable can help your business rapidly adapt, visit our Trump 2.0 page.
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