Canada may have dodged an economic bullet when U.S.President Donald Trump revealed his list of countries facing retaliatory tariffs on products imported by his country.
Canada still faces what had already been announced, a 25 per cent tariff on assembled vehicles and some automotive parts, a further 25 per cent on steel and aluminum, 10 per cent on energy and potash, and a blanket 25 per cent on all goods exempt from the North American free trade agreement.
Yet, the impact remains significant given our country exports $30 billion in goods to the U.S., 25 per cent of all our exports, and 25 per cent of our steel and aluminum products.
However, BDC chief economist Pierre Cléroux had a positive message for B.C.'s short-term economic future despite the challenges ahead for finding alternative markets to the U.S. for Canadian products and supply chain sources.
Speaking at the Central Okanagan Economic Development Commission public forum on navigating trade challenges in the wake of U.S. tariffs held April 3 at the Coast Capri Hotel, Cléroux said Canada's overall economic fundamentals remain strong despite the uncertainty and upheaval caused by U.S. President Donald Trump initiating a global trade war.
Cléroux noted Canada's inflation rate has fallen from eight to 2.6 per cent, interest rates have dropped from five to 2.6 per cent by the Bank of Canada with further reductions slated over the next year, disposable income is beginning to rise again and the job market remains healthy.
"Growth will be lower at about .08 per cent compared to 1.5 per cent last year, and that is due to the tariffs. However, we are not expecting to see a recession in Canada. The economy is growing but just at a slower pace than we are used to from recent years," Cléroux said.
Cléroux acknowledged the tariff threat has created uncertainty for Canadian consumers, manufacturers and resource supply providers.
"But the context becomes clearer the more we see what the U.S.'s. intentions are for tariffs while our interest rates will continue to go down," he said.
He said B.C. is better set up to combat tariffs than many other provinces, as 53 per cent of B.C.'s exports are targeted for U.S. markets, a reflection of the province using the Asia market access to diversity in its economic output.
"Overall 77 per cent of Canada's exports go to the U.S. Ontario and Quebec are likely to feel the biggest impact of the tariffs at this point," he said.
As Prime Minister Mark Carney said this week, the trade relationship between Canada and the U.S. has changed, Cléroux said the opportunity is now for a pivot away from the U.S. to seek out other markets and suppliers in Asia and Europe.
His suggestions for that pivot include taking a deep dive for all businesses into how to respond to the tariff challenge and identify new markets, eliminate inter-provincial trade barriers between provinces, diversify exports, for consumers to support local businesses and foster a friendlier business environment for entrepreneurs.
He also cited the growing influence of technology, with robotic plant resources and AI support to create better efficiencies in the manufacturing of products and providing of services.
"We are just at the beginning of this revolution but it already is impacting local businesses," he said.
Cléroux closed his presentation, hosted by the Central Okanagan Economic Division held in 91´ó»ÆѼ, noting that Canada's reliance on the U.S. market because the two countries are neighbours and the U.S. market is big enough for Canadian manufacturers and suppliers to be profitable.
"We may have always looked north and south in the past and that was good enough in many cases for us, but now we have to start looking east and west," he said.
