Canada Trucking Blockades Worsen Supply Chain Issues, Inflation

In November, Canada's government announced that all truckers crossing the border into the country from the U.S. would either need to isolate for 14 days or show evidence of double vaccination starting January 15.

Since then, truckers protesting the mandate have been steadily building truck blockades in the Canadian capital and at major border crossings. It's estimated that these blockades have cost hundreds of millions of dollars in cross-border trade, every day. On top of the direct cost of lost trade, these trade route blockages also worsen supply chain problems caused by the pandemic.

Over the course of the protests, blockades have been formed at Canada's border with Detroit, namely the Ambassador Bridge, as well as crossings into Montana, North Dakota, and Minnesota. The Ambassador Bridge has since been cleared, the majority of protestors have been removed from the capital, and all crossings are expected to be open again by Thursday, Feb. 24.

In the meantime, these protests have already resulted in major supply chain damage. The U.S.-Canada border sees $360 in trade every day, and the Ambassador Bridge alone accounts for a quarter of that trade. Most of the goods that have been held up are in the auto sector, with Ford (NYSE: F), Toyota (NYSE: TM), and General Motors (NYSE: GM) each announcing shutdowns and production delays due to the blockades.

These disruptions are likely to exacerbate inflation in the price of new cars, a metric that shot up 12.2% last year. Other common Canadian exports like red meats, processed fruits and vegetables, snacks, and vegetable oils could also see bumps in price.

Even if the Canadian protests are cleared by Thursday, experts worry that there could be copycat protests in the U.S., leading to further supply chain problems. However, others point to the fact that the U.S. is much laxer with vaccine mandates as a reason to suspect the blockages won't spread.

The protesting began with several hundred truckers shutting down Ottawa's downtown area for three weeks, honking and blocking the roadways. While residents initially seemed to empathize with the truckers' plight, the noise and disruption resulted in business closers and criticism.

However, many people on both sides of the protest are criticizing how the government has been addressing the issue.

On Saturday, Feb. 19, truckers were arrested in droves in the country's capital, and anyone associated with the protest is at risk of having their assets frozen by the Canadian government. Those blocking traffic could see six-figure fines and jail time.

While some in the Canadian government fear that the movement against vaccine mandates is going to become an increasingly significant problem in the country, others argue that the negative view of the trucker protests makes it unlikely that their group will gain more traction.