Canadian hardware companies are bracing for significant economic impacts as discussions surrounding the potential ending of Trump tariffs gain momentum. With U.S. President Donald Trump’s tariffs still fresh in the minds of many business owners, the uncertainty hangs like a dark cloud over the industry.
Ramee Mossa, who is deep in fundraising for his power hardware company FTEX, shares the palpable anxiety. He notes, "For hardware startups, it’s going to make it more difficult for us to raise (money) and it’s going to make it more difficult for companies who make hardware to survive." Though he feels FTEX may navigate the storm without catastrophic repercussions, the broader network of suppliers—essential for hardware companies—could feel the pinch.
To date, FTEX has been fortunate; it manufactures systems for e-bikes and e-scooters in Malaysia using components sourced from Taiwan. Thankfully, most of its clients are Canadian and American brands whose products are made in China or Vietnam, thereby sidestepping the looming 25 percent duty on Canadian goods and the existing 10 percent tariff on Chinese imports. Yet Mossa is cognizant of the stress these tariffs can induce throughout the supply chain, "It could challenge our suppliers and manufacturers, reflecting costs on businesses relying on their goods or labor," he added.
Discussing routes around tariff-affected regions, Mossa articulated the frustration felt by many leaders: countering potential tariffs isn’t straightforward and often requires tedious adjustments. He pointed out, "The best thing for Canada would be to buy Canadian stuff," echoing sentiments from other industry leaders.
Hamid Arabzadeh, the CEO of Ranovus, which designs advanced silicon chips, echoed Mossa's sentiments. "Taiwan, for example, is responsible for 60 percent of the world’s semiconductor fabrication...This was started in the late ’70s," he stated, reflecting the expansive timeline necessary for establishing chip manufacturing capabilities. The reality is stark; costs for establishing chip production plants reach billions, and the lead time to become fully operational stretches across years.
Avinash Persaud, vice-president of VentureLab’s Hardware Catalyst Initiative, spoke similarly about the urgent need for clarity and direction within Canada's semiconductor strategy. He emphasized the government's role: "When you have clarity around [semiconductor strategy], it makes investment and foreign partnerships much more likely." Polling reports reflect businesses would feel more secure with governmental backing, especially when tariffs are looming.
Persaud continued, highlighting the uncertainty of operating during Trump's administration, which often felt volatile to both businesses and investors. Any facility outside the U.S. may risk facing additional tariffs; Arabzadeh painted the challenging picture succinctly, "If we were to ask a foreign company...to package this together, they would have to learn everything about our business...that knowledge will start to go to our competitors."
Indeed, as production moves toward international partners, Arabzadeh expressed concern for losing intellectual property and customer relationships—critical components of Canadian technological innovation.
Should tariffs be imposed on the semiconductor production too, Arabzadeh fears his clients may resist accepting higher prices, turning instead to non-tariff zones like Taiwan for production. "But it’s just the consumer who’s going to suffer,” Mossa warned. He expressed concern about the potential rise of end-product prices due to tariffs, predicting, "If we start making these e-bikes in North America because we have 200 or 300 percent tariffs on them from Asia, they’re going to cost as much as a used car."
Should tariffs take effect, both companies will likely have to evaluate their pricing strategies carefully. Mossa expressed how FTEX’s clients might be squeezed to raise prices, stating, "We’re seeing their prices kind of stay steady and we’re seeing our prices go up. That gives us less room to maneuver."
The road ahead appears challenging. Mossa utters frustrations over the political climate, lamenting how companies like his are left adjusting to the remnants of tariff imposition and uncertain trade relationships, declaring, "Canada would need to impose insane tariffs to make it more competitive for FTEX’s clients to make products here rather than Asia." This adjustment may not simply benefit companies but would lead to economic repercussions for consumers.
Notably, Arabzadeh also posed the pressing need for government action—particularly to contemplate restricting imported AI hardware from companies using foreign components when Canadian equivalents exist. While Canada currently lacks the necessary strategic framework, Arabzadeh believes action is needed to reshape the marketplace. "It would sort of force those people to design our product if they want to sell to Canada." He remains hopeful for legislation to spur domestic product use, countering international competitiveness.
But, with no national semiconductor strategy currently, companies like Ranovus and FTEX find themselves grappling with turbulent market forces and uncertain futures. Arabzadeh’s perspective encapsulates the overall industry’s anxiety; without government support and clear direction, Canada risks its place as a viable contender in the global tech arena.
Persisting concerns echo through conversations as industries await concrete action on the tariffs. Political maneuvers fuel unease yet serve as legitimate motives for innovation and resurgence. Mossa and Arabzadeh, both reflective of their sectors, advocate for unity and resilience saying, "We’ll lose as a company from this, but we’ll lose as a society as well." The looming threat of tariffs continues to stir the waters across various bureaucracies—leaving the fate of Canadian advancement hanging precariously.