Karan Ramchandani, managing director of capital markets at Post Oak Group, explains how US-Canada tariffs and USMCA uncertainty are disrupting the auto, steel and wood sectors, freezing long-term capital and driving up costs for consumers and small businesses.
After President Donald Trump imposed a new round of import bans on certain Canadian products that took effect Tuesday, American consumers and small business owners in particular could suffer the consequences, investment advisor Karan Ramchandani told Fox News Digital in an exclusive interview.
“Small and mid-sized business owners — especially those with businesses around the U.S. and Canadian border — should be concerned,” Ramchandani, managing director of capital markets at investment firm Post Oak Group, told Fox News Digital.
Amid an increasingly volatile trade war, Trump imposed additional controls on imports of about $1 billion in Canadian goods, including dairy, alcohol and some automobiles.
This product selection alone could lead to an increase in inflation, but it could also trigger an inflationary response due to impacts on downstream production, Ramchandani explained.
CANADIAN BUSINESS LEADER WARNS TRADE UNCERTAINTY RISKS “CAPITAL COOLING” AS USMCA TALKS DRAW ON
Canadian products that include dairy are caught in a trade war with the United States (Ben Brewer/Reuters, file / Reuters)
“As soon as it hits production, factories and lumber, and, for example, automobiles, it’s a problem that’s going to hit the consumer because prices are going to go up. Prices are always initially absorbed by the producer, by the manufacturer when tariffs go up. But if they don’t stabilize, they end up being passed on to the consumer,” Ramchandani said.
“The majority of these products were already subject to tariffs, so it’s not that these are new products subject to tariffs.
“But when you apply the same tariffs, as is the case on January 1, on automobiles, steel and wood, as well as areas that directly affect factories and production, it will have a direct impact on the economy in the long term.”
He also revealed that there was another potential unintended consequence of the saga due to Trump’s decision not to participate in the automatic renewal of the United States-Mexico-Canada Agreement (USMCA).
Trump calls Canada’s potential membership in the European Union “laughable” and warns Europe against “very heavy tariffs”
President Donald Trump speaks with Canadian Prime Minister Mark Carney during the G7 summit in Evian-les-Bains, France, in June. (Evelyn Hockstein/Reuters/Pool, file / Reuters)
“Capital is around the corner because you can’t make major long-term investment deals – say, for example, moving a factory from Canada to the United States… You can’t do that unless your trade policy is stable. Right now, USMCA is being questioned every year,” Ramchandani said.
“The United States refused to renew the agreement, which means it is still in force, but now it will be reviewed every year, whereas originally when you renewed the agreement it was renewed every 16 years.
“On the one hand, you want companies to invest in the United States and, say, build a factory. But on the other hand, when you ask the USMCA question: ‘Why would anyone build a factory and invest a billion dollars in the country when the politics doesn’t support it,’ that’s the whole question, right? It’s not a good time to invest right now.”
Ultimately, Ramchandani said the impact of the trade war could push investors, supply chains – and Canada – down other paths.
A new round of import bans on certain Canadian products affects automobiles, an expert told Fox News Digital. (iStock/iStock)
“I think supply chains will eventually be reoriented,” Ramchandani predicted. “Smaller players will take longer and may temporarily take a hit to their business, but they need to redirect their revenue to other countries and other locations, find other means of supply chain and source cheaper materials from other countries.
“Ultimately, it will be mostly exports and imports outside of Canada and the United States. That’s the only way the economies can stabilize, as Canada already does.”
Canada, Ramchandani explained, has already reduced its share of exports to the United States from 76% in 2024, according to the Royal Bank of Canada, to less than 33% today.
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“This is a new development over the last year and a half, which is an important sign that capital is moving between Europe, Canada and other countries,” Ramchandani told Fox News Digital.
Canadian Prime Minister Mark Carney has already met with European Union officials after negotiations with the United States failed and reached an agreement to increase bilateral trade volumes between the two bodies by 80%.
FOX Business has contacted the White House and the Canadian Prime Minister’s Office for further comment.
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