Sask. Chamber of Commerce calls for ‘strategic’ response to U.S. tariff threat

By Glynn Brothen

Commerce advisors say political leaders should prepare for the fallout if President-Elect Donald Trump’s tariffs are enacted. But with complex trade dynamics, it’s unclear if any strategy will benefit either country, let alone Saskatchewan.

Prabha Ramaswamy, CEO of the Saskatchewan Chamber of Commerce, said the results of a 25 per cent tariff on Canadian exports would increase business costs in Canada.

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Saskatchewan’s $26.9 billion market would suffer, as 54 per cent of the province’s exports go stateside.

Determining the course of action for a trade overhaul is one thing, but whether it will happen at all is another aspect to consider. Trump said he will implement the tariff on both Canada and Mexico on his first day in office, promising those tariffs will remain in place until both countries curb drug trafficking and illegal immigration into the U.S.

“I’m not sure (the tariff) benefits anyone, quite honestly,” Ramaswamy said. “This trading relationship works both ways, technically, because the U.S. is reliant on our goods and our products as well.”

Saskatchewan’s primary exports are crude oil, potash, and canola oil. Over 77 per cent of Canada’s exports go to the U.S. adding up to roughly $600 billion.

The chamber is calling on officials to ensure the continuity of the USMCA trade agreement (the result of a renegotiated NAFTA) and to examine trade opportunities elsewhere.

“I think it’s really important that we actually focus on solutions…. And start to think about negotiating a possible exemption for certain goods,” Ramaswamy said.

She said discussion continues on whether this is a sure thing, or saber rattling.

“We actually have no idea,” Ramaswamy said, noting that colleagues have told her Trump’s threat needs to be taken seriously.

“And I’ve heard from a few that say ‘let’s not panic. This may or may not happen.’”

It’s not a new concept for the incoming Trump administration. In 2018, his government imposed a 25 per cent tariff on Canadian steel and a 10 per cent tariff on aluminum, prompting Canada to retaliate with its own levies.

According to Bethany Kulaway, the chamber’s director of policy, that action led to a 37.8 per cent decrease in steel exports and 18.6 per cent decrease in aluminum.

“While the bulk of Saskatchewan’s export goods were not subject to the new tariffs, our province did not entirely avoid their impact. Saskatchewan’s steel and aluminum industries exported more than $91 million of goods in 2017, and nearly all of this was to the United States,” she said in an emailed statement. “Our neighbours in Alberta and Manitoba were also deeply affected, owing to their larger steel and aluminum industries.

“Ultimately, no province escaped the 2018 tariffs unscathed, even those with highly diversified export markets and lower reliance on the U.S. for international trade.”

Jenifer Bartman, a business advisor and former venture capital executive, said she can’t call the tariff threat a bluff.

“I think he feels that it’s a position of strength to put tariffs on other countries and have his voters think this is worthwhile and Trump’s getting stuff done. Will it be a 25 per cent tariff? I don’t know. But I think it will be something,” she added.

Bartman said she believes Trump is motivated by his “America First” approach, but she says the tariff won’t do American consumers any favours.

“The country that is subjected to a tariff, they don’t pay the tariff. It’s analogous to a tax,” Bartman said. “It’s really not good for either side of the border to see this type of situation.”

If an American company pays tariffs on Canadian supplies, consumers will bear the brunt of higher costs, she said. In the case of a manufacturer using Canadian supplies for its own products, a tariff could lead to decreased production. Diversifying international trade would lead to more challenges like a lack of existing trade agreements and quality control issues, particularly with agricultural products. Ultimately, profits would take the biggest hit.

If Trump’s goal is to develop a more robust manufacturing market in America, Bartman said that can’t happen overnight.

“In order to get the capacity to do that, you need a plant, you need equipment, you need capital to do all of that and you need time,” she said. “It’s not as easy as people think that ‘we’ll just do it ourselves.’ It’s much more difficult.”

Prime Minister Justin Trudeau and Canada’s premiers met virtually on Wednesday to discuss next steps in trade negotiations, but the initial talk was not without its tiffs. Ontario Premier Doug Ford accused the federal government of being “flat footed” in its response to strengthening the border. Quebec Premier François Legault said he wasn’t given a “clear answer” on whether details of a plan are worked out.

The USMCA deal is up for renegotiation in 2026.

–with files from Kyle Duggan and Anja Karadeglija of The Canadian Press