The first and most obvious is the Increased Cost of Spare Parts and Supplies. Many maintenance departments rely on spare parts, equipment, and raw materials from across borders. A 25% tariff on goods moving between Canada and the U.S. would increase the cost of these essential items. Impact: Maintenance budgets would need to stretch further, potentially forcing departments to delay repairs, use suboptimal parts, layoff staff or reduce inventories.
As a result of these Higher Operational Costs, manufacturing companies may need to pass increased expenses onto their customers or absorb the costs themselves. Maintenance departments, most of which are already cost-sensitive, could face cuts or restrictions on upgrades and proactive maintenance. Impact: Reduction in staff or deferred maintenance could lead to equipment failures and increased downtime, reducing overall productivity and competitiveness.
Another important consideration is Supply Chain Disruptions. Maintenance often depends on a seamless supply chain for just-in-time delivery of critical components. A 25% tariff could slow down the movement of goods as companies navigate customs and rework supply chains. Impact: Delays in receiving parts could lead to longer repair times, forcing companies to maintain larger inventories or seek alternative suppliers at a potentially higher cost. Increased carrying costs of expensive sparts and critical components can run into the millions for very large inventories.
To mitigate these sudden additional costs with cross border trade, there will be a Shift Toward Domestic Sourcing. Faced with tariffs, companies may attempt to source maintenance parts and supplies domestically. However, this could introduce challenges, such as limited availability, higher costs, or lower-quality alternatives. Impact: Maintenance teams may have to work with unfamiliar vendors or products, increasing the risk of incompatibility or reduced equipment lifespan.
There could also be a Reduced Investment in Preventative Maintenance. With overall costs rising due to tariffs, companies may prioritize immediate production needs over preventative maintenance. There may be a temptation to forgo scheduled PM’s and just ride it out, resulting in a shift toward more corrective maintenance. Impact: Skipping regular maintenance increases the likelihood of equipment breakdowns, emergency repairs, and unplanned downtime, further straining the company’s resources and reputation. Eventually this may spiral out of control until unplanned stoppages halt production.
The elephant lurking behind these impacts is the very real possibility that 25% tariffs could spell the end of some companies. Being unable to maintain a profit under the strain of increased costs can bleed out a company. Jobs will be lost. Some clients will leave. Some companies will have to fold. A 25% tariff would significantly disrupt the operations of companies on both sides of the borders. Companies will need to explore alternative sourcing strategies, optimize supply chains, and potentially renegotiate contracts to mitigate these challenges. Over time, the tariffs could push manufacturers to diversify export markets or invest in more self-sufficient maintenance strategies to reduce reliance on cross-border trade.
At this point the tariffs have been postponed for one month pending action on an agreement to secure both the southern and northern borders. The flow of illegal immigrants and the criminal drug trafficking are the biggest concerns that must be resolved immediately. These are the real reasons underlying the economic leverage being placed upon Canada and Mexico. These issues should have been addressed long ago but have been ignored by current Canadian and Mexican administrations as well as past US administration. Promises have been made, so let’s see where this sits in 30 days. However, the current government of Canada has a 9-year record of breaking promises. It would be wise to prepare for the worst but hope for the best.
