A new Desjardins report says there are five sectors of the Canadian economy that are most vulnerable to incoming U.S. President Donald Trump's proposed tariffs, with exemptions expected for the energy and automotive sectors. "With Trump set to take office on Jan. 20, Canadian companies are rightly highly concerned. Some should be more worried than others," Desjardins principal economist Florence Jean-Jacobs wrote in a report released on Friday.

Trump has threatened to impose a 25 per cent tariff on all goods imported from Canada and Mexico, raising concerns for Canadian companies across a wide range of industries. More than 70 per cent of Canadian exports of goods and services are sent to the U.S., Jean-Jacobs noted in the report, making tariffs "the biggest threat to the Canadian economy."

The Desjardins report said that Canada's oil extraction and auto and parts manufacturing sectors are the most dependent on exports to the U.S., "but we don't believe they're the most at risk under the new Trump administration." That's largely because energy production in the U.S. would be "insufficient to meet domestic needs" and tariffs could significantly raise domestic prices. The North American automotive industry is also highly integrated across North America. Thirty-five per cent of supply in the U.S. automotive market coming from direct inputs; 14 per cent come from Canada and 38 per cent from Mexico, which is at risk of the same tariffs. Conversely, in categories such as transportation equipment other than cars, paper and cardboard, agri-food and petroleum based goods, less than 15 per cent of U.S. supply depends on imports.

Jean-Jacobs expects that tariffs are more likely to be imposed on sectors where the U.S. doesn't rely heavily on imports to meet domestic demand and doesn't depend on intermediate inputs for local production. Tariffs are also more likely in categories where the U.S. can find substitutes for Canadian goods and services, which Jean-Jacobs said is particularly the case in some sub-sectors of manufacturing, mining, livestock and fishing.

"Thus, the sectors that are likely to be most affected by potential tariffs would be primary metals (including aluminum), food and beverage manufacturing, chemicals, machinery and aerospace," Jean-Jacobs wrote.

"The wood, pulp and paper, nonferrous metals and plastic industries could also be hard hit. This is also the case for the transportation and wholesale trade sectors, which would suffer significant indirect effects from potential tariffs. Agriculture, fishing and livestock would not be spared the indirect effects of lower demand for processed food product exports."