With the ongoing uncertainty surrounding global trade policies, Canadian chemical manufacturers face potential disruptions due to tariffs proposed by the United States. These tariffs, if implemented, could significantly impact the cost of doing business in the U.S., making it more expensive to export chemical products from Canada.
For companies looking to maintain their competitive edge, finding a way to avoid these tariffs is crucial. One solution? Shifting some manufacturing operations to the United States.
That’s where chemical toll blending comes in. By partnering with an experienced U.S.-based toll blender like Royal Chemical, Canadian manufacturers can continue serving their U.S. customers without the added cost of tariffs. In this blog, we’ll explore the details of the proposed tariffs, why manufacturing in the U.S. is a smart alternative, and how Royal Chemical’s capabilities can provide a seamless solution—offering not just tariff protection but additional operational advantages.
Understanding the Potential U.S. Tariffs on Canadian Goods
In early February 2025, the United States announced plans to impose significant tariffs on imports from Canada, Mexico, and China. For Canada, this entails a 25% tariff on all goods, with a reduced 10% tariff specifically for Canadian energy products, including oil, natural gas, and electricity. These tariffs were initially scheduled to take effect on February 4, 2025. However, following negotiations, a one-month reprieve was granted, delaying the implementation until March 4, 2025.
As of now, the situation remains fluid. However, Canadian businesses should prepare for their potential implementation.
How Canadian Chemical Manufacturers Can Avoid Tariffs
With the looming possibility of U.S. tariffs on Canadian goods, chemical manufacturers need a proactive strategy to protect their business. One option is to establish a production facility in the United States, allowing them to manufacture and distribute their products domestically. However, this approach comes with significant challenges—building a new facility requires a large upfront capital investment, navigating complex regulatory approvals, and managing ongoing operational costs.
A more cost-effective and immediate solution is to partner with a U.S.-based chemical toll manufacturer like Royal Chemical. Toll manufacturing enables companies to produce their formulations within the United States without the expense and risks associated with constructing and operating a new facility. By leveraging Royal Chemical’s five strategically located U.S. plants, Canadian chemical companies can continue serving their American customers while avoiding tariffs, maintaining their competitive pricing, and ensuring fast, reliable distribution.
The Advantages of Partnering with Royal Chemical
At Royal Chemical, we offer a range of services that support your growth, including liquid blending, powder blending, packaging, and warehousing and fulfillment solutions. Partnering with Royal Chemical provides Canadian chemical manufacturers with a strategic and cost-effective way to avoid tariffs while gaining additional benefits that enhance their supply chain and profitability.
Avoid Tariffs and Stay Competitive in the U.S. Market
By manufacturing their products within the United States, Canadian chemical companies can sidestep the proposed 25% tariff, keeping costs competitive in the U.S. market. Instead of facing price increases that could drive customers toward domestic suppliers, companies that partner with Royal Chemical can continue offering their products at market-friendly prices without the added financial burden of tariffs. This ensures they remain a viable option for their American customers.
Leverage Royal Chemical’s Supplier Relationships and Economies of Scale
Royal Chemical has long-standing relationships with key suppliers, allowing us to source raw materials at competitive prices. By working with Royal Chemical, Canadian companies can benefit from these established supply chain efficiencies, reducing costs on ingredients and materials. Additionally, Royal Chemical’s bulk purchasing power enables better pricing for packaging, warehousing, and transportation, helping businesses maintain profit margins.
Strategic U.S. Locations for Faster Shipping and Distribution
With five strategically placed manufacturing facilities across the United States, Royal Chemical provides a major logistical advantage.
Royal Chemical’s manufacturing plants are located in:
- Macedonia, Ohio
- East Stroudsburg, Pennsylvania
- Chattanooga, Tennessee
- Hayward, California
- Dallas, Texas
Our locations allow us to offer:
- Same-day shipping for stocked materials
- One-day turnaround for 83% of the U.S. population
These locations allow Canadian manufacturers to ensure their customers receive products faster and more efficiently than if they were shipping from Canada, minimizing supply chain disruptions and improving customer satisfaction.
Comprehensive Packaging, Warehousing, and Fulfillment Capabilities
Royal Chemical offers a full suite of packaging and fulfillment solutions, allowing manufacturers to streamline their operations. Whether a company needs small-batch packaging or bulk containers, Royal Chemical can package products according to customer specifications, including:
- Bottles (from 8 ounces to 2.5 gallons)
- Pails, drums, totes, and bulk packaging
- Custom labeling and private branding
Beyond packaging, Royal Chemical’s 250,000 square feet of warehousing space ensures that companies can store their products close to their customers, reducing lead times and shipping costs.
A Future-Proof Solution, With or Without Tariffs
Even if the proposed tariffs do not take effect, Canadian chemical manufacturers can still gain a significant competitive edge by working with Royal Chemical. Lower logistics costs, streamlined packaging and fulfillment, and faster delivery times all contribute to long-term operational efficiency and profitability.
By making the strategic decision to manufacture in the U.S. with Royal Chemical, Canadian chemical companies can avoid financial uncertainty, reduce supply chain complexity, and focus on growing their business in the U.S. market.
If you’re interested in learning more, talk to an expert at Royal Chemical or contact us today.
