“Our response is pretty straightforward. It’s a message about what this is going to cost them.” — B.C. Premier David Eby
Overnight, Jake Power went from reflecting on one of the best months that his Agassiz-based custom sawmill has ever had to staring into a potential recession sparked by U.S. President Donald Trump’s tariffs.
Power, along with every other British Columbian, woke up to the reality of a trade war with the U.S. as Prime Minister Justin Trudeau levied immediate counter tariffs on $30 billion worth of U.S. goods in response to Trump’s 25 per cent tariffs on Canadian imports, except for energy which faces levies of 10 per cent.
“Our business was growing, our customers were doing well,” said Power, CEO of Power Wood. “Now, I think we all expect a North American recession if this continues, which means reduced opportunity to grow business.”
Power, however, is in a more fortunate position holding his own within an economy facing the bleak prospects of losing as many as 45,000 jobs and $43 billion worth of GDP in a trade war that will quickly start taking a bite out of consumers’ wallets.
Premier David Eby declared that “all bets are off” in terms of his response to standing up for the province, which included taking alcohol from so-called Republican controlled “red states” off of B.C. liquor store shelves.
“Our response is pretty straightforward,” Eby said to members of the media assembled for the province’s annual budge lockup. “It’s a message about what this is going to cost them.”
However, the battle will cost B.C. consumers, too, who will likely first be stung by the retaliatory tariffs on U.S. imports of produce, meat and dairy products, according to Carol McAusland, a University of B.C. food-systems economist.
“When it comes to agricultural products, things that don’t have a lot of processing in them — we get it from California and it does go right on our shelves, some of that we’re going to see within days,” McAusland said.
However, that will depend on a product’s perishability and the extent to which distributors can source products from other countries, such as produce from Mexico or citrus from overseas, McAusland said.
Trade economist Werner Antweiler noted that Canada tried to be strategic with its retaliatory tariffs by focusing on products where Canadians can find “affordable alternatives,” such as appliances that can be sourced from Asian or European manufacturers.
“So we will see quite a lot of (difference) in when we will see the changes,” Antweiler said. “Groceries first, then probably textiles and then big consumer goods.”
On the export side, however, Antweiler said he worries the most about B.C.’s forest industry, which was “already struggling (at) the edge of profitability,” and now faces 25 per cent tariffs on top of anti-dumping duties levied against Canadian lumber exports in the long-standing softwood lumber dispute.
Anti-dumping levies could total 27 per cent by summer, which would tax B.C. forest products more than 50 per cent, which Kurt Niquidet, president of the B.C. Lumber Trade Council, said would have impacts on both sides of the border.
“In British Columbia, the forest sector is B.C.’s second largest export. And so, this has a possibility of really impacting our exports and that has ripple effects throughout the forestry supply chain and can impact workers and communities in British Columbia,” Niquidet said.
B.C.’s salmon farming sector, which is already operating in a constrained environment with federal commitments to end open-net-pen fish farming off the province’s coast, expects $155 million to $168 million in lost economic activity and up to 2,000 fewer jobs, according to the B.C. Salmon Farmers Association.
The association, in a statement released Tuesday, noted that 70 per cent of its product is exported to U.S. customers and the 25 per cent tariff would curb stateside demand by up to 40 per cent.
In response, the association, in an unattributed statement, called for “a rational, evidence-based policy approach and a clear government signal that salmon farming is a key component of Canada’s agri-food sector.”
There is another looming danger in a trade war if it results in continuing depreciation of the Canadian dollar versus the U.S. currency, according to economist Bryan Yu.
“For our economy, what we’re expecting is that it will be a pretty significant shock where, if tariffs endure, they are longer lasting, you can have that environment where you see a near recession or recession this year in the Canadian economy,” said Yu, chief economist for Central 1 Credit Union.
The impact would be more severe in Ontario than B.C., which has a more “diverse portfolio of trading partners,” Yu added.
“But it is going to be damaging,” he said.
In a commentary on the tariff situation, Yu noted, “there are no silver linings to the current trade war environment.”
With files from The Canadian Press