B.C. has lost sight of the path to prosperity, say economists. Could Trump’s tariffs help us find our way back? This is Part 2 of Postmedia’s How Canada Wins series.
As B.C. faces thousands of job losses and a possible $43 billion drop in GDP over the next four years, Premier David Eby takes an optimistic tone.
“We’re big enough to stand on our own two feet,” he said Tuesday in response to the announcement of U.S. tariffs. “This is a moment for us to take an attack and turn it into a source of strength for ourselves as a province and as a country.”
But how do you find a path to prosperity during a trade war?
A vice-president of the Business Council of B.C., David Williams, said B.C. is starting from a weak position. Economic growth has stagnated in a “lost decade,” with job creation in the private sector stalled since 2019.
At $10.9 billion, B.C. is also running the largest deficit in the country relative to the size of its economy, he said. “For 10 years, we’ve been going in the wrong direction.”
Williams said U.S. President Donald Trump is coming after B.C.’s industrial base. The fear is that what has happened in the B.C. forestry sector will “replay” across other sectors, including natural resources, manufacturing and agriculture, as companies can’t justify basing operations in B.C. and decide to move south of the border.
“B.C. must respond by ensuring this province is an attractive place to invest, build businesses and retain skilled workers relative to the United States,” he said.
The key, according to economists and policy experts, is realizing where B.C.’s competitive advantages lie — in the natural resource sectors that have long been the bedrock of the provincial economy, as well as in Metro Vancouver’s future-focused, knowledge-based sectors such as technology, life sciences and green energy — and reducing barriers to growth.
Return to the ‘fundamentals’
Williams said B.C.’s competitive advantage remains its natural resources, including the skills, technology and businesses built around extracting and exporting them. Natural resource jobs can unlock “tremendous” GDP growth, and tend to be high-paying.
“We’re good at doing these things,” he said.
Resources make up about 75 per cent of B.C.’s merchandise exports, and the natural resources sector underlies much of the province’s prosperity, including in Metro Vancouver. While you won’t see a mining truck rumbling down Howe Street, the sector supports head offices, law and accounting firms, transportation and technology companies across the province.
Williams urges the province to think differently about carbon emissions, switching from a domestic mindset to a global one. “Let’s not kid ourselves that reducing our domestic emissions is going to prevent forest fires,” he said. “It’s the global reduction that matters.”
B.C. should be focused on “responsible” energy development, said Williams, adding that the natural resources the province exports, like LNG, provide an alternative to coal and have a larger impact on global emissions than reducing the province’s natural resource development. It also boosts the local economy.
Jock Finlayson, senior fellow at the Fraser Institute, said that for the better part of a decade, governments at the provincial and federal levels have not been focused on the economy.
The economist wants to see a return to the “fundamentals,” including more support for B.C.’s export industries.
“We really need to think through that lens,” he said. “You can’t build prosperity over time selling houses back and forth to each other.”
The largest thorn in the side of business is the sheer burden of regulation, he said.
Finlayson said the Vancouver Fraser Port has been trying to add another terminal for more than a decade, fighting “tooth and nail” to expand.
“In other parts of the world, government would be asking the port what they could do help them,” he said, pointing out that China has built several dozen terminals in the time it has taken Vancouver to discuss adding one.
“It’s a stellar example of the challenges we face in getting anything done,” he said. “We reflect, we consult, we hesitate, we try to accommodate all feedback. In the meantime, the world moves past us.
“It’s a mindset of complacency, a NIMBY-ism.”
Attract foreign investment
Eighteen months after opening a Vancouver office, Boomi has hired 200 people and expects to hire more. The U.S. software company markets an integration platform that enables apps to “speak to each other.”
Chief marketing officer Alison Biggan said Boomi chose Vancouver because its thriving tech sector and strong post-secondary schools have created a deep “talent pool.” Boomi also sees benefits in having a “footprint” on the west coast.
Biggan, who grew up and attended university in Vancouver, started her tech career at Crystal Decisions, a software company based in Vancouver. She credits that company and others that were established in the early 2000s for laying the foundation of the region’s tech sector.
Biggan said she understands concerns about the high cost of living possibly driving companies to locate elsewhere, but “on the flip side, Vancouver is an incredible place to live,” which can attract talent. A well-paying job can make it possible to live in a city where housing is expensive.
More than 350,000 jobs in B.C. are with multinational companies, many in sectors that are at the least risk from tariffs, according to a recent report by Invest Vancouver. The Metro Vancouver economic development service works to attract foreign investment to the region, following the model of similar organizations in other metropolitan areas across Canada.
“We need to make sure the world knows what we have to offer,” said president Jacquie Griffiths.
That includes geopolitical stability and a highly educated workforce, particularly in “future-focused, knowledge-based” sectors such as technology, life sciences and green energy.
Griffiths said many companies choose to locate in Vancouver due to its proximity to the U.S., so tariffs might make it more difficult to attract businesses aiming at the American market.
“It’s an opportunity to diversify,” she said.
Lean into innovation
While the urge to pull back on investment is strong in times of uncertainty, Sarah Goodman hopes government will avoid a “scarcity mindset.”
The president of the B.C. Centre for Innovation and Clean Energy believes B.C. must act with “confidence and boldness.”
“When it comes to climate, the direction of travel is clear. If America stands back, it creates an opportunity for us to leapfrog into that space,” she said. “If others flinch, we should forge ahead.”
To Saad Dara, CEO of Mangrove Lithium, that means supporting companies to start up and possibly fail. Mangrove, which he began as a student at UBC, is building North America’s first electrochemical lithium refining facility in Delta. He said companies like his are “successful based on statistics.”
“We want a system where we generate enough shots on goal that some will go in,” he said. “Some early stage ideas won’t make it, but some will.”
Metro Vancouver is home to an impressive community of innovators and startups, said Peter Cowan, CEO of Innovate B.C., a Crown agency that supports the growth of B.C.’s tech sector.
Innovation can contribute to both job creation and job transformation, he said. “Take clean tech and life sciences, for example. These are rapidly growing sectors that are creating jobs at the technology provider level, but evolving industries like health care to add new, high-value jobs there as well.”
Cowan said B.C. needs to “lean on those strengths.”
Supporting small business to grow
Any strategy to make B.C.’s economy more resilient must take into account that more than 90 per cent of the province’s businesses have fewer than 50 employees.
“Small business is our strength,” said Jasroop Gosal, policy and research manager at the Surrey Board of Trade. “We want to make sure that we create the conditions for them to grow and take that next step.”
Tax competitiveness and red tape reduction at all levels of government, including municipalities, is important, said Emily Boston, a B.C. policy analyst with the Canadian Federation of Independent Business.
Businesses are forced to spend too much time filling out paperwork, said Gosal, giving the example of the provincial speculation tax form, which must be completed by all property owners, year after year, with information the province should have access to through other means.
“Government has the information already, but it still has to be repeated multiple times,” he said.
Small things like simplified instructions around regulatory compliance and improved online service portals would also help.
“Making sure that all links work on the CRA website,” he said. “Making sure people are not on hold for hours.”
Bridgitte Anderson, president of the Greater Vancouver Board of Trade, said even before the threat of tariffs, the region’s economy was underperforming, with a stagnating economy.
Strong startups struggle to “scale and grow” due to a variety of factors, including the cost of doing business in B.C., lack of industrial land and red tape.
“It’s death by a thousand cuts,” she said.
The provincial government’s recent steps to streamline permitting and accelerate projects are a “good start.” But with a high deficit, there isn’t much room to provide relief to businesses that will bear the brunt of tariffs, she said.
But the trade war could ramp up efforts to increase economic growth and “position B.C. where it should be,” she said.