Prime Minister Justin Trudeau and Canadian provincial leaders are meeting Wednesday evening after US President-elect Donald Trump threatened to impose 25 per cent tariffs on Canadian goods.
Prime Minister Justin Trudeau said a “Team Canada approach” will be vital in the face of sweeping new tariffs pledged by Trump.
For prime ministers, protecting their exports and economies is their top priority.
Some of Canada’s largest provinces stand to lose a lot if the tariffs go into effect, said Eric Johnson, chief economist at BMO Capital Markets.
“Ontario really comes to mind here. Alberta does too,” he said.
Map of Canada with largest exports to provinces and territories. Donald Trump said he will sign an executive order imposing 25% tariffs on all products coming into the United States from Canada and Mexico.
As of 2022, Canada’s largest export to the United States by value is crude oil, valued at $152.6 billion. According to Statistics Canada, the United States accounted for 97.4 percent of Canadian crude oil exports, with Alberta contributing 87.4 percent of the total volume of exports to the United States.
In response to the threat of customs duties… Alberta Premier Danielle Smith said in a social media post That the Trump administration has “legitimate concerns regarding illegal activities” at the border, a reference to Trump’s stated concerns about border security.
But she added that the vast majority of Alberta’s energy exports to the United States “are delivered through safe and secure pipelines,” which “in no way contribute to these illegal activities.”
Where is Ontario’s auto sector going?
Ontario Premier Doug Ford said Trump’s proposal represents the “biggest threat” from the US administration in decades, and is “extremely harmful to Canadians and Americans” on both sides of the border.
He said: “We love our American friends and they love us, and this is not the way to deal with your closest allies.”
I hope we can find a solution to support both sides of the border. “We are working collaboratively with the new administration, and I am confident we will,” Ford said.
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Ontario is the most valuable exporting province to the United States, with exports to its southern neighbor amounting to $220.5 billion annually. Ontario’s most valuable export is automobiles, valued at $36 billion, followed by gold, valued at $17.66 billion.
Canada’s largest exports to the United States are crude oil and automobiles. Donald Trump said he will sign an executive order imposing 25% tariffs on all products coming into the United States from Canada and Mexico.
Johnson said tariffs could slow Ontario’s investments in electric vehicles, battery production or critical minerals.
“If these tariffs are imposed for a meaningful period of time, I think that will slow some of that investment,” he added.
Flavio Volpe, president of the Auto Parts Manufacturers Association, said Canada’s auto sector is closely linked to the United States.
“Half of the cars we make in Canada are American company cars. Half the components that go into all the cars that are manufactured come from the United States and 55 percent of the raw materials needed to make those components in cars come from the United States,” he said.
Could Quebec turn to European markets?
Speaking to reporters in Quebec City, Quebec Premier Francois Legault said everything must be done to avoid tariffs, which could lead to the loss of thousands of jobs.
Quebec exports $10.8 billion worth of raw aluminum each year, with the United States accounting for 73.9 percent of its total exports.
Jean Simard, president of the Canadian Aluminum Association, said the aluminum industry may have to shift to Europe.
“Everyone wants our metal, but Europe is definitely the main market. Europe is in a deficit of aluminum, as is the US.” “We may decide to ship to Europe and they will take everything we can send there, especially since Russian metal has been blocked out of the market.” “.
Quebec is not alone in exporting important minerals to the United States.
Yukon’s largest export is copper ore, valued at $163.1 million annually, and the United States represents 95 percent of the total value of its exports.
When the first Trump administration announced tariffs on Canadian softwood lumber in 2017, British Columbia was one of the hardest-hit provinces.
Industries in British Columbia that could be hit hard include softwood lumber, energy, electricity, mining, agriculture and fisheries, experts said.
“This is clearly going to be devastating for workers on both sides of the border, whether in the United States or Canada,” Prime Minister David Eby said Tuesday.
“The impact on families will be very significant.”
However, British Columbia’s trade portfolio is relatively diversified compared to some other provinces, with exports to the United States accounting for 57 per cent of total exports.
Asia is British Columbia’s second-largest trading partner, with 35.5 per cent of the province’s exports heading there each year.
Manitoba’s pharmaceutical and agricultural sectors
“The pharmaceutical industry is another industry that is largely export-driven as well,” Johnson said.
Manitoba is the province that stands to lose the most when it comes to pharmaceuticals, with pharmaceutical exports reaching $2.7 billion annually as its largest export.
The United States represents 73.4 percent of its exports.
Wheat is Manitoba’s second largest export, worth $1.6 billion.
Agricultural groups are warning of negative impacts on agriculture, with Grain Growers of Canada (GGC) saying 70 per cent of Canadian grain is exported, with exports to the United States worth $14 billion.
“Imposing blanket tariffs would create instability for farmers who already face tight profit margins due to rising input costs, changing weather patterns, and increased government taxes,” the group said in a statement.
Prince Edward Island’s exports of frozen potatoes and other vegetables are worth $490.9 million annually.
Other agricultural and food companies, such as Saskatchewan’s fertilizer industry and Nova Scotia’s seafood exporters, are likely to be watching announcements from Washington and Ottawa as well.
Can tariffs pass?
While Trump has proposed sweeping tariffs, experts say it is not yet certain that he will go ahead with imposing them.
“The old saying that you have to take Donald Trump seriously, but not literally, absolutely applies here,” Johnson said.
“What is more likely to happen is that there will be trade negotiations between the US, Canada and Mexico rather than blanket tariffs,” said Tu Nguyen, an economist at RSM. “It is very difficult to implement tariffs on all goods coming from a country in reality.”
