Some things could get more expensive in the new year.
With trade disputes with Canada’s two largest trade partners – China and the United States – looming, some experts are warning that consumers could see higher prices for goods, from solar panels to cars, over the next couple of years.
Tabled on Dec. 16, the day Chrystia Freeland resigned as Canada’s finance minister, the 2024 fall economic statement announced “Canada’s intent to impose tariffs on imports of certain solar products and critical minerals from China early in the new year.”
“The tariffs on solar products and critical minerals from China are likely to increase the cost of solar panels, inverters, and batteries in the short term, as these items rely heavily on imported components and materials,” said Iggy Domagalski, CEO of the Wajax Corporation, which provides equipment, parts, and services to Canadian industries.
The budget document did not say how big the tariffs are going to be, but said they would be imposed early in the new year.
However, Erik Johnson, senior economist at BMO Capital Markets, said some of the higher costs could be mitigated if Chinese firms find ways around Canada’s tariffs by using southeast Asian exporters. This changes the country of origin from China to whichever country Chinese firms are using as an export hub.
“There’s a lot of kind of trade via Southeast Asia, which is basically China using Southeast Asia to ship a lot of solar products to avoid tariffs,” he said.
The year 2026 could see even broader tariffs on Chinese imports.
“Canada also intends to impose tariffs on semiconductors, permanent magnets, and natural graphite from China beginning in 2026. These measures will prevent Chinese non-market trade practices from causing unfair and harmful market distortions in Canada and throughout the North American continent. Further details on these tariff measures will be announced soon,” the document said.
Get daily National news
Get the day’s top news, political, economic, and current affairs headlines, delivered to your inbox once a day.
Semiconductors are used in a range of consumer products, from cars to cellphones. Smartphones, laptops, automobiles, consumer electronics and satellites all use microchips.
The Canadian economy has felt the impact of semiconductor shortages in the past. The COVID-19 pandemic upended the global semiconductor supply chain and Canada, too, was affected, with supply shortages and higher prices on things like vehicles and electronic appliances.
Johnson said that Canada is not too dependent on China for leading-edge semiconductors, which largely come from Taiwanese manufacturers. In recent years, the U.S. has tried to increase domestic semiconductor production. In 2025, the Taiwanese firm TSMC will begin manufacturing microchips in Arizona, which should further secure the North American supply chain.
However, he added that some industries in Canada could be affected by the rising cost of lower-end Chinese semiconductors.
This could mean higher car prices in 2026.
Semiconductors are among the most important components in electric vehicles. Disruptions could hit Canada’s auto sector, raising prices.
“A lot of automobiles today are not using the highest-end chips if they’re brand-new electric vehicles. Some of those are being sourced from China today or other parts of the world that might come under effect of these updates to tariff policy,” Johnson said.
Domagalski said the tariffs on Chinese magnets could have an impact on Canada’s construction sector, which could mean more construction delays on big infrastructure projects.
“Permanent magnets play a critical role in heavy-duty electric motors, industrial pumps and wind turbines. Tariffs on these materials could raise costs for industrial equipment and renewable energy infrastructure, potentially delaying projects or making them more expensive,” he said.
Weeks after he won a second term, U.S. president-elect Donald Trump announced that he was considering 25 per cent tariffs on all goods coming from Canada.
Johnson said Ottawa wants to avoid a trade war with the U.S. and the tough stance on China could also be a message to Trump that the two countries are entirely aligned on trade policy.
“About 20 per cent of Canadian GDP is (predicated on) goods exports to the United States. The most harmful thing that could happen to the Canadian trading relationship would be meaningfully broad tariffs placed on Canadian goods going to the United States,” he said. “Nothing else that anyone else can do in the world is going to matter nearly as much as that.”
However, despite the importance of the trade relationship with the United States, the budget document hinted that Canada would adopt a tit-for-tat approach in international trade.
“Reciprocity will be considered as a requirement for all federal spending and policies,” the fall economic statement read.
Domagalski said retaliatory tariffs from China could disrupt supply chains for Canadian industries.
“In the industrial sector, equipment such as engines, generators, and advanced machinery — commonly sourced from the U.S. — might become more expensive. These increased costs could ripple through to industries like manufacturing, construction and energy production, potentially slowing projects and raising prices for end users,” he said.
If Canada were to impose retaliatory tariffs on the U.S., Johnson said it could lead to significantly higher prices.
“It might have broader effects on inflation expectations,” he said.
© 2025 Global News, a division of Corus Entertainment Inc.
