The BC government is preparing for the worst as U.S. President-elect Donald Trump’s threat of a 25 per cent tariff on Canadian imports looms.
While it’s still unknown what goods the tariffs could be imposed on, the BC government fears they could have a disastrous impact on the province’s economy, resulting in a cumulative loss of $69 billion in economic activity over the next four years.
However, the exact impact is yet to be determined, according to Premier David Eby and Finance Minister Brenda Bailey, who discussed the threat in a media briefing on Thursday.
Assessing the impact
The province recently completed a preliminary assessment of the potential impacts of a trade war on the BC economy. This assessment does not represent the ministry’s budget forecast, which is still under development and will be released publicly as part of Budget 2025.
The preliminary assessment was based on internal planning for the duration of Trump’s term as president, assuming Canada retaliates with a similar level of tariffs.
However, Bailey notes it should be interpreted as “one of many” possibilities, as there is still a “great deal of uncertainty regarding the exact nature of the U.S. policies that may be implemented.”
“The sources of uncertainty include the amount and scope of potential tariffs, the timing of announcements and implementation, and whether other jurisdictions retaliate with tariffs of their own,” said Bailey.
BC sent around 54 per cent of total merchandise exports to the U.S. in 2023, with China, Japan, and other nations making up the remaining 46 per cent.
Wood, pulp, paper, metallic minerals, and energy products combined account for around 67 per cent of total goods exports.
“Our key commodity exports are, of course, softwood lumber, copper, natural gas, and coal. Our trade diversity helps shelter the economy from U.S. tariffs and enables the province to bolster trade with Asian markets. This is where BC’s trade diversification helps set us apart from the rest of Canada, which is much more dependent on the U.S. as an export destination.”
For example, Bailey says Alberta, Ontario, and Quebec sent over 75 per cent of their goods exports to the U.S. However, the U.S. still remains BC’s largest trading partner, and Bailey says the proposed tariffs would have significant impacts on BC’s economy.
The ministry’s assessment estimates the province’s GDP could decline by 0.6 per cent in both 2025 and 2026.
Job losses could reach 124,000 by 2028, with the largest declines presumed to be in natural resource sector industries and associated manufacturing.
Losses would also be felt in the transportation and retail sectors, and unemployment would increase to 6.7 per cent in 2025 and 7.1 per cent in 2026. The current base is 5.8 per cent.
Corporate profits are estimated to be $6.1 billion lower this year, and $3.6 billion lower in 2028.
From a revenue perspective, Bailey says a significant economic slowdown would affect many of the province’s key revenue streams, resulting in a revenue impact of $1.6 billion to $2.5 billion, with the largest impacts expected for personal and corporate income tax.
BC’s response
Strengthen, diversify and respond are the three prongs attached to BC’s response to a potential tariff war with the U.S., according to Premier David Eby.
“The first part of our response is that we will respond. The second component is to strengthen our provincial economy. The final piece is to diversify. These tariffs are proposed not just against Canada but against countries around the world. We will partner with those countries and work with them to respond and to deepen our relationships with them,” said Eby.
Eby says the second component, which involves strengthening interprovincial trade relations, includes accelerating permitting and ensuring that BC uses its natural advantages—both its position on the Pacific Ocean and its wealth of critical minerals and metals needed around the world.
It will also involve removing internal trade barriers with other provinces. BC is currently working with Alberta to remove barriers, first around wine, but also around electricity and energy—something Eby plans to push for with other premiers to ensure the nation is strong as a whole.
He notes that BC’s strong trade relationships across the Pacific with many other countries provides an opportunity for the province to strengthen those relationships and reduce its dependency on the U.S.
“I firmly believe that we have everything we need in this province to succeed. We have the people with the skills. We have the resources and the geography to take this threat and turn it into an opportunity to grow prosperity for everyone in this province and across the country. British Columbia will lead the way in responding to these tariffs and ensuring that our people are protected.”
Retaliatory tariffs
Eby says BC is “ready to do whatever it takes” to get the attention of Americans and remind them of how their prosperity is tied to Canada’s.
“Our country is under direct threat by the president-elect of the United States. It is a declaration of economic war, in my opinion. And in wartime, people need to come together and support each other. Whatever it takes, British Columbia will be there to make sure that we’re doing our part.”
Unlike Alberta Premier Danielle Smith, who has openly opposed the federal government’s proposal to respond with tariffs on energy exports, Eby supports a discussion around how the nation distributes its electricity.
BC is a significant energy exporter to the U.S., in the form of electricity, natural gas, and petroleum products.
Eby says without these products, Americans will pay significantly more for electricity and fuel, and they’ll face higher costs for industrial use of natural gas—creating multiple challenges for American consumers.
“The failure of the president-elect to appreciate the fact that these exports create American jobs, reduce costs for Americans, and also have the benefit of increasing prosperity in Canada as well is extremely unusual to me. I don’t understand why Americans would force themselves to pay 25 per cent more in tax on energy imports from Canada. It makes absolutely no sense.”
He hopes that the impact on American consumers alone will cause a “reckoning” in the United States, forcing the government to revisit its strategy.
If it doesn’t, however, Eby is in full support of discussions on Canada’s energy distribution, saying, “We don’t have to sell electricity to the U.S. We can sell it and use it for other purposes domestically.”
“We don’t have to do these things. The consequences, though, for everyday Americans could be quite significant down the West Coast of the United States.”
“Why the Americans wouldn’t take that seriously, I’m not sure. But in any event, we can help them understand the role that we play in energy security for them. And unfortunately, we’ll be forced into that position of demonstrating that to them.”
President-elect Donald Trump will be sworn in as the 47th president of the United States of American on January 20.
– Files from Storrm Lennie, My Nelson Now staff
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