Canada faces its biggest economic threat in decades.
Earlier this month, newly elected U.S. President Donald Trump threatened to impose — then paused — 10 per cent tariffs on Canadian energy products and a 25 per cent import tax on most other Canadian goods.
Trump vowed this week to revive his plan to slap 25 per cent tariffs on Canadian goods on March 4.
On Thursday, Alberta’s finance minister forecast a budget deficit of $5.2 billion, job losses and a drop in Gross Domestic Product (GDP) growth of nearly two per cent in 2025 if, as Trump has threatened, U.S. tariffs come on Tuesday.
Tariff pain coming to oil patch
Economist and Mount Royal professor Young Jung expects the oil-rich province of Alberta to be hit the worst economically by Trump’s tariffs because of its reliance on the energy industry.
“Considerable portions of Alberta imports include refined oil products made in U.S. So, if Canada imports retaliatory tariffs on this import, pure price could rise, further straining the Alberta economy,” said Jung.
Approximately 82 per cent of Alberta’s energy capacity gets exported to the U.S. with a $130 billion dollar export value.
Canadian Association of Energy Contractors CEO and president Mark Scholz expects heavy impacts on the energy industry if Trump imposes tariffs.
“There’s going to be some sort of impact on investment and there’s going to be some sort of impact on employment. You know, at the end of the day, we don’t know what the level of the tariffs could be,” said Scholz.
A report from the Peterson Institute for International Economics (PIIE) projects that inflation will go up 1.68 per cent in Canada with a significant GDP loss.
“For the duration of the second Trump administration, U.S. GDP would be around $200 billion lower than it would have been without the tariffs. Canada would lose $100 billion off a much smaller economy.”
Everyone will feel the pain of tariffs
This will mean higher interest, mortgage, and rental costs for Albertans.
Jung believes Alberta’s best way to combat tariff threats is to diversify the economy and reduce its reliance on the energy industry.
“Alberta must diversify its economy beyond the energy sector by expanding the industry, toward more tourism and high technology and advanced manufacturing,” says Jung.
Jung warns that retaliatory tariffs should only be used in the first few months. Long-term effects could lead to lower revenue, job loss, and an economic downturn in the Alberta economy.
How Canada might retaliate
So how can Canadians help fight back? There are multiple ways.
Jung mentions purchasing locally made products, private sector campaigns, and reducing leisure trips to the U.S. could all help put economic pressure on American businesses and policymakers.
Scholz believes this is the perfect time for Canada to look outside of the U.S. as a major trading partner.
“It actually forces Canada to have some really important conversations about how we expand our ability to export our markets off the continent and outside of the American trading sphere,” said Scholz.