Explainer: B.C. Businesses Face Risks from Trump's Tariff Threats

As Donald Trump assumes the presidency with a promise of an "America first" trade policy, businesses in British Columbia (B.C.) are increasingly concerned about the implications for trade with their largest market, the United States.

In 2023, B.C. companies exported approximately $30.4 billion to the U.S., accounting for over half of the province's total exports. The situation is especially dire for the forestry sector, which is grappling with ongoing softwood lumber tariffs as part of a long-standing trade dispute.

Understanding Trump's Trade Policy

Trump's trade agenda aims to create stricter trade rules to protect American industries and workers. According to local economist Jock Finlayson, this creates uncertainty for B.C. exporters regarding their access to the U.S. market.

Federal officials in Canada have attempted to reassure businesses that the government is working to maintain a positive relationship with the incoming administration. However, Trump's focus on protectionism could reshape the landscape for Canadian businesses.

Impact on Cross-Border Relations

One consequence of Trump's focus on border security is the potential negative effect on the Canada-U.S. relationship. Laurie Trautman, an American policy expert, notes that heightened attention to U.S.-Mexico border security might divert resources away from maintaining smooth cross-border operations with Canada.

This could result in longer wait times for both people and goods crossing the border, impacting trade efficiency. Trautman highlights that past administrations had cooperated to ease border concerns, something that may be lost in an era focused on stricter border controls.

Effects on Exports

B.C. exporters could face tariffs that add to existing challenges, such as the duties on softwood lumber. If Trump’s administration takes a hard line with tariffs, many products could see an increase in prices, further complicating trade.

Maria Rajanayagam, a trade advocate, emphasizes the importance of the Canada-U.S.-Mexico Agreement, hoping it will safeguard free trade, but acknowledges uncertainty as the agreement has a review date set for 2026.

Finlayson points out that if Trump's party gains control of Congress, the risks to trade agreements may grow, allowing potential tariffs of up to 10% on a wide range of Canadian products.

Implications for Imports

Canada's strategy to combat any potential tariffs from the U.S. remains unclear. Federal Finance Minister Chrystia Freeland faced questions regarding protective measures for Canadian exporters but offered little information.

Experts like Carlo Dade warn against predictable retaliatory tariffs, as retaliation could exacerbate the situation for Canadian businesses. A report from the Canadian Chamber of Commerce suggests that hefty tariffs could mean significant economic losses for Canada, possibly as high as $30 billion annually.

Conclusion

The dynamic trade relationship between Canada and the U.S. faces new tests as Trump enters office. How accurately these new policies will affect exporters, importers, and cross-border trade remains to be seen. B.C. businesses must remain vigilant and adaptable in a changing economic environment as they navigate potential risks from the U.S. government's trade strategy.

Trade, Economy, Imports, Exports, Policy