Senator Shaheen sees firsthand the negative effect of Canadian tariffs on Derry bakery

DERRY, NH – For Chatila’s Bakery & Ice Cream in Derry, the threatened and actual tariff policy of the Trump administration has already damaged the company’s viability. Since the campaign last summer when then-candidate Trump began discussing imposing tariffs on our neighbor Canada to today, their sales have declined rapidly. Wholesale customers in Canada represent 85% of the company sales.

Mohammed Chatila and his family have operated their commercial bakery and ice cream company for 37 years. They specialize in baked goods that are gluten-free, reduced fat, low sodium, low cholesterol, and dairy-free for people who have special dietary restrictions and are looking for a healthier dessert alternative. They are the only commercial bakery of this type in the country.

For Chatila, the tariffs are the last straw; he has put his company and facility up for sale.  His biggest customer stopped buying, and his costs for imported ingredients, electricity, and eggs are rapidly escalating. He received notice from his fuel supplier of tariff surcharges they will impose. The company employed more than 20 people at its peak. Today, they have reduced their staff to just two remaining employees.

U.S. Sen. Jeanne Shaheen joined Chatila at his industrial baking facility for a tour and, more importantly, a conversation about the harm of current tariff policies. Canada is the largest trading partner of NH, and this looming trade war will affect every economic sector of the state, Shaheen said.

“The ongoing uncertainty creates a real challenge, particularly for small businesses who have more trouble being able to weather hard times than big business. And in New Hampshire that means higher prices, fewer jobs and a weaker economy,” Shaheen said.

Trump imposed a 25% across-the-board tariff on goods from Canada and Mexico on March 2. Two days later, he temporarily rescinded them, and the trade status reverted to the terms of the United States-Mexico-Canada Agreement (USMCA) until his so-called “Liberation Day “ on April 2, when they will take effect again.

The USMCA agreement was negotiated during the first Trump administration and was a trilateral renegotiation to replace the NAFTA  trade treaty.

“Donald Trump himself said that when he negotiated the USMCA, the trade agreement with the United States, Canada, and Mexico, it was the ‘best agreement ever”, and now he’s saying, well, that wasn’t good enough, so I’m going to raise tariffs, and I’m going to put at risk all these small businesses. I’m going to create uncertainty and chaos in the economy,” Shaheen said.

In reaction to the tariff threats, the Canadian government is enacting reciprocal tariffs that will further complicate trade economics.  Canadian consumers are also responding with a growing “Buy Canada” movement. They are shifting buying habits, moving away from US-made goods, and expressing national pride and support for their national economy.

Chatila’s retail business has dropped off an estimated 20 to 25% due to increased costs passed on to his customers.  He understood consumer behavior, saying, “I’m trying to increase the prices to cover costs, but the moment you increase the prices, the sales are going to be less. So who’s going to buy a dozen muffins for $20? Who’s going to buy it?  I mean, we used to sell it way back, 8, 10, 9, probably now 13, 14 dollars it’s not easy.”

Responding to Chatila’s experience, the Shaheen said, “ I hope that Congress and the President will listen to reason and hear stories like yours that say this is not taking us in the right direction.  It’s taking us in the wrong direction. Eighty-five percent of their business is with Canada, and most of those orders have been canceled, and they’re worried about whether they can fill other orders because they can’t get the ingredients because the costs have gone up, and because of the scarcity, and many of them, they source from China, from Canada, from other places that are affected by the tariffs. So it’s having a huge impact. It’s going to continue to have an impact.  We’ll see on April 2nd exactly what changes.”

Chatila expressed his frustration with the economic conditions and the constant state of uncertainty facing New Hampshire companies.

“The backbone for the state of New Hampshire is small businesses.  If you start losing a lot of small businesses, what’s left?” Chatila said.

Shaheen expressed her frustration with being a minority party in Washington. She placed the responsibility squarely on the Republican administration and majority in Congress..

“It is not what people expected when they voted for Donald Trump in November. What they wanted was somebody who promised to lower the cost of rent, somebody who promised to lower the cost of food, somebody who promised to lower energy costs, somebody who promised to address health care costs. He has done none of that. And people now are beginning to notice, and they don’t like it, and we need to speak up, all of us,” Shaheen said.