Canada is bracing for economic turbulence as U.S. President Donald Trump threatens to impose steep tariffs on Canadian goods. The potential tariffs, set to kick in on February 1, could significantly impact various sectors, particularly Alberta's energy industry, which experts warn could be placed in the crosshairs of these trade disputes.
According to the Conference Board of Canada (CBOC), recent data indicates Edmonton's economy has benefited from mass migration over recent years. The board's forecasts suggest, though, this influx is likely to wane as the Canadian government reduces immigration targets. Robin Wiebe, lead economist for the CBOC, notes, “Edmonton's housing has been really affordable, but people notice this, so they move there, and this bids up the price of housing faster than the Canadian average.” Despite this, Wiebe anticipates Edmonton’s population growth will slow to three percent by 2025, down from last year's 4.8 percent.
The previous year did see Edmonton's employment figures increase by 0.6 percent, but these gains were offset by the rapid increase of labor force entrants, resulting in the unemployment rate rising to 7.6 percent—the highest it has been in three years. Wiebe forecasts improved job growth for 2025, predicting around 18,000 new positions, which should drive the unemployment rate down to about 6.6 percent by 2029.
While the Lethbridge and Calgary regions also feel the pinch from tariff uncertainties, the overarching sentiment is one of caution. “If there were to be tariffs and export restrictions and a trade war surrounding the energy sector — well, it will be very difficult for Alberta,” Wiebe adds.
The looming trade war isn't only about Alberta; it casts shadows over the entire Canadian economy. The CBOC predicts Canada’s GDP will grow by 1.5 percent in 2025, slightly improved from prior projections due to stabilizing interest rates. Yet, Cory Renner, CBOC’s associate director of economic forecasting, warns, “While declining interest rates have alleviated some pressure, uncertainty surrounding the trade environment and the impact of weaker population growth are weighing on growth prospects.”
This uncertainty is compounded by the federal government's decision to lower immigration targets, which, for some, presents both challenges and opportunities. Renner speculated this might relieve housing pressures, particularly as provincial governments ramp up efforts to support residential construction.
When asked about the strategy to counter U.S. tariffs, several Canadian leaders believe encouraging consumers to 'buy Canadian' may mitigate losses. Ontario's Premier Doug Ford stresses the need for Canadians to prioritize home-produced goods. He remarked, “When you look at ‘made in Canada’...buy them,” aiming to rally consumers to support domestic industries and lessen reliance on imports.
Yet, experts warn this approach may not yield the desired effect due to the current Canadian economy's structure. Torsten Søcthing Jaccard from the University of British Columbia noted the difficulties Canadians face in finding homegrown products. “We don't do a lot of the final consumer good processing in Canada,” he explained. This sentiment was echoed by Daniel Trefler, who suggested the consumer goods focus would be ineffective, pointing out the complexity of Canadian industry and the reliance on imported components.
This struggle to simplify the 'buy Canadian' message is echoed by everyday Canadians. Retiree Deb Kroeger expressed frustration at the scarcity of domestically produced clothing options, demonstrating the disconnect between consumers' intentions and the practical availability of Canadian goods.
The challenges extend even to the grocery sector, as Canada grapples with agricultural limitations during certain seasons, which may leave consumers reliant on imported produce. Glen Huard, another retiree, exemplified this quandary, stating, “I know, in January, you can’t get a radish grown in North Bay.” This prompts many to question not just the practicality but also the economic rationale behind prioritizing local products amid external pressures.
While some stakeholders see potential benefits for local industries from increased buying of Canadian products, others remain skeptical about the overall efficacy. Companies like Indigo Books & Music Inc. and Urban Barn express hopes of benefiting from such sentiments, viewing potential tariffs as opportunities, yet many others are cautious about making bold strategic changes without clearer signals from the U.S.
The discussions surrounding tariffs, regional economics, and local purchasing highlight the complex interplay between national identity, economic strategy, and consumer behavior. The impending U.S. tariffs put pressure not just on Alberta’s energy sector but on Canadian manufacturing capabilities, overall markets, and the livelihoods of everyday Canadians.
With economic forecasts clouded by tariff threats and reduced immigration prospects, Canada finds itself at a crossroads. How leaders and citizens respond could reshape the market dynamics of the North American economy. The coming months will be pivotal for Canada as it addresses its internal economic challenges and navigates the uncertain waters of international trade relations.
The economic challenges Canada faces today underline the need for thoughtful strategies to bolster resilience within its borders, aligning economic growth with the realities of global trade. The outcome hinges not just on political decision-making but also on Canadians' willingness to adjust to the shifting economic climate in their communities.