Yes, labor strikes or work stoppages at Canada’s two largest railroads, Canadian National Railway and Canadian Pacific Railway, may indeed pose significant disruptions to the U.S. supply chain. The two rail firms together serve many U.S. companies, transporting both raw materials and finished goods between the U.S., Canada, and other global markets. Should a work stoppage occur, American industries which rely heavily on these transport links, such as the automotive, agriculture, and manufacturing sectors, among others, could be hardest hit. It could lead to delays in shipments, shortage of goods, increased costs and an overall slowdown in operations. These disruptions could be further magnified considering the existing supply chain challenges caused by the COVID-19 pandemic. Therefore, businesses that rely on these rail links would need to seek out contingency plans such as alternative transportation methods or delay their production schedules if feasible, though these options may come with additional costs.

As contract negotiations continue, the chance of strikes at Canada’s two largest railways, Canadian National Railway and Canadian Pacific Railway, looms on the horizon. These potential work stoppages come at a particularly inconvenient time as both the U.S. and Canada are working to recover from supply chain disruptions related to the COVID-19 pandemic.

Combined, these two railroads facilitate a significant amount of cross-border trade between the United States and Canada. In 2020, rail accounted for approximately 16% of international trade between the two nations. A strike or work stoppage at either company could further disrupt an already strained supply chain.

Crisis looms if a resolution isn’t found quickly. Canadian law allows the workers to strike 72 hours after presenting their final offer, which for Canadian National Railway was on Wednesday, and for Canadian Pacific on Thursday. The Canadian Labour Congress and International Brotherhood of Teamsters have been negotiating for new contracts with the rail companies. The main points of contention are related to working conditions and worker pay.

The consequences of a rail strike in Canada could be far-reaching. Many manufacturing facilities in the United States rely on just-in-time delivery of components from Canadian suppliers for production. A disruption, even if it is short-lived, could result in production backups, delayed shipping times, and higher costs for manufacturers.

The last significant railroad strike in Canada was in 2019 when about 3,200 Canadian National Railway conductors and yard workers went on an eight-day strike. That strike caused a significant decrease in the shipping of goods including grain, oil, potash, and consumer items. Furthermore, it led major congestion at Canadian ports, as rail cars could not leave to make room for incoming shipments.

Canadian government may intervene to prevent a potential strike, which is quite common in the past, considering the considerable disruption to the Canadian and U.S. economy that would ensue. They could enforce back-to-work legislation to stop a strike and to keep trains running.

In summary, potential strikes at Canadian National Railway and Canadian Pacific Railway are threatening to exacerbate an already difficult situation for cross-border trade between the U.S. and Canada. A resolution is needed quickly to avoid disruption to supply chains, increased costs, and manufacturing delays.