Alberta “has to be ready for the worst” with blanket 25-per-cent tariffs on Canadian goods and services to the United States almost a certainty starting next week when Donald Trump becomes U.S. president.
Premier Danielle Smith, who visited president-elect Trump on the weekend, said Canada needs to prepare for the tariffs to come into effect on Jan. 20, Trump’s first day in office.
“I haven’t seen any indication in any of the president’s public commentary, or even in the comments that he had with me, that he’s inclined to change his approach,” Smith said Monday during an online media conference.
Trump, who won the U.S. presidential election in November and soon after promised tariffs on imports from Canada, Mexico, China and other trading partners, says the tariffs will be put in place unless Canada improves its security measures along its border with the U.S.
Tariffs have become a benchmark of Trump’s economic agenda as he heads into his second term. Economists have said the cost of the tariffs will be passed on to consumers and are generally skeptical of them, considering them a mostly inefficient way for governments to raise money and promote prosperity.
Jim Stanford, an economist and the director of the Centre for Future Work, said Tuesday the promised tariffs will bring “a huge amount of economic pain and dislocation on both sides of the border.”
“A 25-per-cent tariff on everything that we sell there, and they’ve got to know it’s going to be matched by tariffs on our side, is going to be a huge disruption,” Stanford told CTV News Edmonton, outlining the $1-trillion in annual trade going both ways between the neighbouring North American countries.
“Yes, Canada has a small surplus in that two-way trade – we sell a bit more in America than they sell here, $40 billion in 2023 – but that’s tiny compared to the massive flow going in both directions.”
If they stopped buying Canadian oil and gas, they would have an energy crisis that would make the 1970s OPEC shocks look like child’s play.
— Economist Jim Stanford
Stanford recently authored a new report that argues the U.S. benefits as much as Canada from the current bilateral trade relationship. The report says reasons for the equal benefits include Canada being the largest market for U.S. exports, the large surplus of services that the U.S. exports to Canada, Canada’s exports of raw goods and energy that the U.S. manufactures into products, and Canadian buying of U.S. debt.
Stanford said the “greatest irony” in Trump moving to implement tariffs – the incoming American leader has said the U.S. does not need anything from Canada and has spoken about using “economic force” to make the country the 51st state – is inputs such as energy and materials used by U.S. industry to make finished products.
“They are going to be both jeopardizing a huge market in Canada for their products (and) making their own businesses more expensive by imposing a 25-per-cent cost penalty on things they need to use,” he said, adding that Canadians will suffer more in the long term because Canada’s economy is smaller.
“The proportional harm will be more devastating in Canada, no doubt about it.”
Oil and gas is an important product to both Alberta and the U.S. and something that will be “central” in the threatened tariff war, Stanford said.
As Americans buy more than half of their oil imports from Canada, the question around the 25-per-cent levy would become who bears the brunt of it: U.S. energy consumers or Canadian suppliers in the form of lower prices, he said.
“It’s hard to tell how the tariff will trickle down on a product which they so desperately need,” Stanford said.
“If they stopped buying Canadian oil and gas, they would have an energy crisis that would make the 1970s OPEC shocks look like child’s play. They buy far, far more from us than they do from Saudi Arabia, Iran and everyone else in the Persian Gulf.
“There’s no economic logic why they would jeopardize that.”
We can’t be wusses about this. We have to have a spine. I don’t think that begins by taking entire segments of our export products off the table.
— Jason Kenney, former Alberta premier
Smith has cautioned Ottawa against blocking energy exports to the U.S. in response to tariffs, calling it an “empty threat” that would spark a national unity crisis.
Other leaders have taken a different approach, including Ontario Premier Doug Ford, who has said he wants to keep the broader retaliation option on the table.
Jason Kenney, whom Smith succeeded as Alberta premier in 2022, told CTV News on Tuesday that Canada needs to be prepared to retaliate “in kind to any unfair tariffs” by the U.S.
“We can’t be wusses about this. We have to have a spine. I don’t think that begins by taking entire segments of our export products off the table,” Kenney said.
“I think we need to signal to Washington that if they damage this trading relationship with the imposition of some arbitrary tariff on Canada that we will respond in ways that will hurt the United States.
“I don’t like that, but we’re not the ones proposing or starting a trade war, nor should we surrender unilaterally to that kind of hostility and aggression.”
Smith said Monday Canada should focus on addressing the trade imbalance between the countries, which has now become the biggest trade irritant for Trump.
Premiers are expected to meet with Prime Minister Justin Trudeau on Wednesday morning to discuss their strategy.
Agriculture is another major, diverse Alberta industry that ships products to the U.S. and would experience the threat of tariffs differently, said Lynn Jacobson, the president of the Alberta Federation of Agriculture.
He told CTV News Edmonton on Tuesday that the grains and oil seeds industry, for example, may not be as affected by 25-per-cent U.S. tariffs as much as the cattle industry.
I think the cattle industry is quite is under threat, basically, because we ship a lot of our animals down into the States to be processed," Jacobson said.
“If they can’t go across the border without a tariff, or they’re adding to the price, that’s going to back up our facilities that we have in Alberta here.”
He said the province is home to just two large kill plants.
“That’s going to back up those plants, (which will) have an effect on price, and it’s going to going to basically mean people are going to have to hold their animals on the farm and feed lots longer, and that’s going to (result in) overweight animals and all different complications that’s going to happen on that end of it.”
The trickle-down effect on the average Albertan and Canadian consumer, with the federal government imposing retaliatory tariffs, will mean higher prices on U.S. goods, Stanford said.
“It’s wishful thinking for anyone in Alberta to think we can somehow be exempted from this U.S. action,” he said. “I’m sure that was in Premier Smith’s mind when she went down to try and sweet talk Mr. Trump a bit.
“I don’t think it worked, and I don’t think it will work. Alberta will be experiencing the pain of this just like everyone else in Canada.”
A strong, unified, all-levels-of-government approach is going to be required.
— Lynn Jacobson, Alberta Federation of Agriculture president
And that’s why Canada as a whole needs a unified response to Trump’s tariffs threat, both Stanford and Jacobson said.
“This is where a strong, unified, all-levels-of-government approach is going to be required,” Stanford said, suggesting there could be the need for pandemic-style supports, except this time it’s “an economic pandemic, not a health pandemic, but the impacts will be felt throughout the Canadian economy.”
“We’re going to have to support export industries to get through this shock, to reorient their production, to find other markets – whether in other countries or service Canadian consumers instead of servicing exports – and give companies and workers good income support in order to get through this.”
Jacobson said he believes the “biggest danger” when it comes to responding to the U.S. tariffs threat is provinces and industries acting in their own best interests to “try to do certain carve outs for themselves and ignore the rest of the country.”
“That (would) make us a bit weaker. (Governments) need to get on the same page,” Jacobson said. “They need to actually talk with all the other provinces and the federal government. They’ve got to come up with a plan and stick to that plan. They can’t start going off on one-offs.”
With files from CTV News Edmonton’s Chelan Skulski, CTV News Calgary and The Canadian Press
