Prime Minister Justin Trudeau and the premiers of Canada’s provinces will meet Wednesday evening after U.S. president-elect Donald Trump threatened to impose a 25 per cent tariff on Canadian goods.
Prime Minister Justin Trudeau said a “Team Canada approach” is going to be vital in the face of sweeping new tariffs pledged by Trump.
For the premiers, safeguarding their exports and economies is top of mind.
Eric Johnson, senior economist at BMO Capital Markets, said some of Canada’s biggest provinces would have a lot to lose if the tariffs go into effect.
“Ontario really does come to mind here. Alberta does as well,” he said.
A map of Canada with the biggest export for the provinces and territories. Donald Trump says he will sign an executive order imposing a 25 per cent tariff on all products coming in to the United States from Canada and Mexico.
As of 2022, Canada’s biggest export to the United States in terms of value was crude oil, worth $152.6 billion. According to Statistics Canada, the U.S. accounted for 97.4 per cent of Canada’s crude oil exports, with Alberta contributing to 87.4 per cent of the total volume exported to the U.S.
In her reaction to the tariff threat, Alberta Premier Danielle Smith said in a social media post that the Trump administration has “valid concerns related to illegal activities” at the border, referencing Trump’s stated border security concerns.
But she added that a vast majority of Alberta’s energy exports to the U.S. are “delivered through secure and safe pipelines,” which “do not in any way contribute to these illegal activities.”
Where does Ontario’s auto sector go?
Ontario Premier Doug Ford said Trump’s proposal was the “biggest threat” from the U.S. administration in decades and that it’s “very, very hurtful to Canadians and Americans” on both sides of the border.
“We love our American friends and they love us and this is no way to treat your closest ally,” he said.
“I hope we can come up with a solution to support both sides of the border. We’re collaboratively in co-operation with the new administration, and I’m confident we will,” Ford said.
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Ontario is the highest-value exporting province to the United States, with its exports to its southern neighbour amounting to an annual $220.5 billion. Ontario’s highest-value export is motor vehicles, amounting to $36 billion, followed by gold at $17.66 billion.
Canada’s two biggest exports to the United States are crude oil and motor vehicles. Donald Trump says he will sign an executive order imposing a 25 per cent tariff on all products coming in to the United States from Canada and Mexico.
Johnson said tariffs could slow down Ontario’s investments in electric vehicles, battery production or critical minerals.
“If these tariffs were to be in place for any meaningful amount of time, I do think that’s going to slow down some of that investment,” he said.
Flavio Volpe, president of the Autoparts Manufacturers Association, said Canada’s auto sector is deeply linked with the United States.
“Half of the cars that we make in Canada are American companies’ cars. Half of the components that come into all of the cars that get manufactured come from the U.S. and 55 per cent of the raw materials to make those components in cars come from the U.S.,” he said.
Could Quebec pivot to European markets?
Speaking to reporters in Quebec City, Quebec Premier François Legault said that everything must be done to avoid the tariffs, which could lead to the loss of thousands of jobs.
Quebec exports $10.8 billion worth of unwrought aluminum every year, with the United States accounting for 73.9 per cent of its total exports.
Jean Simard, president of the Aluminum Association of Canada, said the aluminum industry could be forced to pivot to Europe.
“Everybody wants our metal, but Europe is certainly the key market. Europe is in an aluminum deficit, as the U.S. is,” he said. “We might decide to ship to Europe and they’ll take everything we can send there, especially since Russian metal has been sanctioned out of the market.”
Quebec is not alone in exporting critical minerals to the United States.
Yukon’s largest export is copper ore worth $163.1 million annually, with the U.S. accounting for 95 per cent of its total value of exports.
When the first Trump administration announced tariffs on Canadian softwood lumber in 2017, British Columbia was one of the hardest-hit provinces.
Experts said the B.C. industries that could be hit the hardest include softwood lumber, energy, electricity, mining, agriculture and fisheries.
“Obviously, this will be devastating to workers on both sides of the border, both in the United States and in Canada,” Premier David Eby said on Tuesday.
“The impact on families will be profoundly significant.”
However, B.C.’s trade portfolio is relatively diversified compared with some other provinces, with exports to the U.S. amounting to 57 per cent of total exports.
Asia is B.C.’s second-largest trading partner, with 35.5 per cent of the province’s exports heading there every year.
Manitoba’s pharmaceutical and agriculture sectors
“Pharmaceuticals is another industry that’s pretty export-reliant as well,” Johnson said.
Manitoba is the province that stands to lose the most when it comes to pharmaceuticals, with medication export amounting to $2.7 billion a year as its biggest export.
The U.S. accounts for 73.4 per cent of its exports.
Wheat is Manitoba’s second-largest export, amounting to $1.6 billion.
Farming groups are warning about adverse effects on agriculture, with the Grain Growers of Canada (GGC) saying that 70 per cent of Canada’s grains are exported, with exports to the U.S. amounting to $14 billion.
“The imposition of sweeping tariffs would create instability for farmers who are already facing tight margins due to rising input costs, changing weather patterns, and increased government taxation,” the group said in a statement.
Prince Edward Island’s frozen potatoes and other vegetable exports amount to $490.9 million a year.
Other agri-businesses and food businesses, such as Saskatchewan’s fertilizer industry and Nova Scotia’s seafood exporters, will likely be watching announcements from Washington and Ottawa as well.
Could the tariffs go through?
While Trump has proposed sweeping tariffs, experts say it is not yet certain he will go ahead with them.
“The adage that you have to take Donald Trump seriously, but not literally, is very applicable here,” Johnson said.
Tu Nguyen, an economist at RSM, said, “What is more likely to happen is that there will be trade negotiations between the U.S., Canada and Mexico rather than blanket tariffs. Tariffs on all goods coming from a country is actually very difficult to implement in reality.”
