Q&A: Chaos and uncertainty of U.S. tariffs impacting Waterloo region businesses | CBC News

The ongoing tension around news of U.S. tariffs against Canada are having real effects on some Waterloo region companies.

The CEOs of two local companies that provide two very different services joined CBC Radio’s The Morning Edition with host Craig Norris to discuss how the tariffs have impacted their businesses and plans they’re making should the tariffs last for some time.

Jennifer Appleby Vines is the CEO of Georgette Packaging in Kitchener and Dave Caputo is the CEO of Trusscore, which is a materials science company that produces sustainable building materials and has locations in Palmerston, Ontario and Calgary, Alberta. 

This interview has been edited for length and clarity. Audio of the interview can be found at the bottom of this article.

Craig Norris: Jennifer, what does your company do? 

Jennifer Appleby Vines: We make custom printed branded packaging. We are a packaging broker, so we help mostly food businesses. Our niche is to navigate what can be a pretty technical buy when the customer is buying. Doesn’t sound like a donut box would be a technical buy, but it can be, there’s a lot to navigate. So we help source, quote, get all of that organized. 

Craig Norris: What percentage of your business relies on the U.S.?

Jennifer Appleby Vines: In any given year, on average, it’s about 75 per cent and we buy about 75 per cent of our products in Canada. 

Craig Norris: Dave, give us a sense of what your company does and what percentage of your business relies on the U.S.?

Dave Caputo: Trusscore is a material science company for sustainable building materials with the ultimate vision of creating a true painted drywall alternative. Our business initially had a lot of success in agriculture. A lot of people used polymer based panels to line barns and that sort of thing. But over the past five years we’ve been introduced to the garage and that’s what’s really driven our business in the United States. And over the past five years we went from maybe 10 per cent of our business to the U.S. to 60 per cent last year. So it’s a super important market for us.

Craig Norris: Jennifer, how are tariffs affecting your business? 

Jennifer Appleby Vines: The biggest thing that’s happening is the uncertainty. After the election happened, we definitely started having conversations with clients about being worried about this. Then the inauguration came and the night when [Trump] first announced the tariffs, I had a text from a customer who is in Santa Barbara. And he said, “I guess we’re enemies now.” And, you know, “am I still gonna get my packaging?” And that’s really causing people to not want to commit to spend money. Uncertainty is a nuclear bomb for economies. People need to know, businesses need to plan and whether that’s our business or the businesses we’re serving. And if they can’t plan, they’re going to hold on to their money. We’ve seen a huge, huge drop in people just committing to buying in the last three months. 

Craig Norris: What about you, Dave?

Dave Caputo: Trusscore has two plants, one in Palmerston, Ontario and the other one in Calgary, Alberta and these plants run 24/7. So it’s a continuous manufacturing process. And so every day, two or three trucks leave these facilities and two of those 3 trucks could be headed to the US or all three could be headed to the US. And so every morning I wake up and I think what’s going on with the tariffs? Am I dreaming or am I living in a simulation? And a chaos monkey is changing the rules literally every couple of days. We have to spend a lot of time thinking about what shipments are going out, Who are they going to, Do they know what a tariff is? Are they are they expecting to clear it? 

The tariff bill could be an additional $15,000 U.S. on it. And customers are unclear exactly who’s going to pay for it. And we explained to them, well, you’re bringing the product in, you have to pay for it. As Jennifer said, it creates a ton of uncertainty.

Craig Norris: Talk a bit about that. How do you navigate and prepare for uncertainty? 

Dave Caputo:  On the very tactical level, we look at what are the next orders [and where are they] going. Let’s get on the phone with those customers. Are they going to accept this additional charge or should we not ship it to them? I would say four out of five say still ship  because they’re saying we have actual projects. Trusscore is perfect for the application, and it’s one of the last things that goes in on the job and it still needs to get done.

But I imagine they’re then having those phone calls with their customers to say, ‘Hey, the price of this just went up and that slows things down.’ From a higher level, stepping back, we’re talking to everybody in the U.S. who’s capable of manufacturing our product and saying, ‘Hey, is there anything that you’re selling into Canada? Is there something we could manufacture for you that’s destined for Canada while you potentially manufacture our product in the U.S.?’

Craig Norris: Is that a possibility for you at all, Jennifer? 

Jennifer Appleby Vines: We do have U.S. suppliers. We always have, we’ve always wanted to expand to that market, and we just ramped that up. It’s just it’s harder to compete because the currency obviously comes into play.  As well it’s always been our wish list to look at expanding to other countries. 

Now, obviously, just like everybody in Canada were like, OK, we have to stop relying on the U.S. so much. We, need to look at Europe and Middle East and other places. That’s a good thing but it’s not something that happens overnight. If I found a supplier today in Europe and then went out and found some customers, I’m probably a year away from actually making money off of that. 

Craig Norris: Jennifer, that is interesting regarding the tariffs and people wanting to know who pays them. Are you experiencing that with your customers?

Jennifer Appleby Vines:  So when Trump was first in office, the first time he imposed 25 per cent tariffs on Chinese goods and we actually had to deal with it at that time. We had U.S. customers who were buying, we were importing coffee cups from China and we had a few customers who were really not happy about it. There were some words exchanged in terms of, this is a tax that you’re president is imposing.

We had a product to go across the border on the 4th of March, which was the day that the tariffs were put in. We begged and begged to get the factory to get it done before that, but they couldn’t do it. It’s shipped out on the 4th. I called my customer, he was like, o’Oh, well, we need these, please just send it and we’ll deal with it.’

I absorbed some of the tariff. In that case as they are a really good customer and I wanted to find a way to work with them. It’s not always about completely imposing it. But then, they ended up shipping across the border two days later, and so they didn’t get charged the tariff. It’s just this whole, back and forth and you’re just constantly trying to find a way to navigate it. 

Craig Norris: Dave, is Trusscore able to absorb 25 per cent of the tariff cost?

Dave Caputo: If you’re really good in the building materials business, you might have a 20 per cent gross margin. And so the U.S. government on the tariffs into the U.S. actually would make more money than Trusscore would in making that shipment.

And so it’s not actually something that’s absorbable at those rates when it’s 20 per cent. But there is a housing shortage. The price of housing is really going up. To think that softwood lumber and your two-by-fours go up 25 per cent, the steel goes up 25 per cent, all that’s going to get passed directly to the consumer. There’s just no other place for it to be paid.

Craig Norris: Dave, what are you going to be doing differently now moving forward?

Dave Caputo: We’re looking for manufacturing partners in the U.S. I think there’s some hope, but I think as this evolves, there’s likely gonna be tariffs at the end of the day. Hopefully they’re nowhere near 25 per cent. We’re redoubling our focus in Canada, which has always been a strong market for us. And Canadians have garages too. And with Trusscore they could literally wash their car in the garage because drywall never gets wet. And it’s a great product to buy Canadian.

Craig Norris: Jennifer, what about you? What’s gonna change permanently or otherwise about the way you do business? 

Jennifer Appleby Vines: Very, similar. Doubling down efforts to find suppliers in the U.S., doubling down efforts to find customers in Canada and marketing ourselves because we are a Canadian company and we do have Canadian suppliers. We can sell Canadian to Canadian. And then, just trying to navigate through the next few months in terms of what it means for my team employment. 

There’s this high-level discussion about tariffs and how that affects things.  And I think what a lot of the regular folks don’t understand, when people who aren’t involved in exporting every day is that this affects small and medium businesses. 
A lot of the people, probably work for small-medium businesses and it will affect employment. There’s going to be people in this region that will lose their jobs because the companies can’t afford to sustain that. And that’s going to have a real affect on the economy. 

LISTEN | Local companies share how U.S tariffs have been affecting their business: