“Shocking, unexpected and terrified,” is how the CEO of the Calgary Chamber of Commerce, Deborah Yedlin, described her reaction to incoming U.S. President Donald Trump’s threat to sign an executive order on his first day in office (January 20, 2025) to impose a 25 per cent tariff on all products coming into the U.S. from Canada and Mexico as well as an additional 10 percent tariff on all imports from China.
“It makes no sense,” said Yedlin. “I mean, people were sort of thinking about that 10 per cent number, but 25 per cent just came out of the blue.”
Citing previous modelling by the Canadian Chamber of Commerce on the impact of just a 10 per cent tariff, Yedlin said Canadians “could potentially see a drop in economic growth by 2.5 per cent, which would be felt on average by about $2,000 per household.”
Mitch Jacobsen, whose company makes Rviita Energy Tea at it’s Calgary manufacturing plant described the tariff threat as “really scary, because as a Canadian company exporting to the U.S. we already feel like we are at a disadvantage, our logistics costs are high, we have the carbon tax here, we make everything locally so our expenses are high and if you add 25 percent on top of that it just makes our product uncompetitive.”
“If you’re a dollar or two dollars above the next product in retail, how do you compete,” added Jacobsen.
He described the threat of Canada retaliating as “even scarier.”
“A big piece of our supply chain, being a Canadian company, comes from the U.S. so now we are getting hit on the front end where our cost of goods are going up and then our consumer price point is going to go up too – so we are getting hit on both sides, which is something that’s definitely very scary,” added Jacobsen.
In her reaction to the tariff threat, Alberta Premier Danielle Smith said in a social media post that the Trump administration has “valid concerns related to illegal activities” at the border. But she added a vast majority of Alberta’s energy exports to the U.S. are “delivered through secure and safe pipelines” which “do not in any way contribute to these illegal activities.”
While Trump’s threat makes no mention of exemptions for Canadian oil and gas, Richard Masson of the University of Calgary School of Public Policy said it doesn’t make sense to impose a 25 per cent tariff on Canadian energy imports.
“We’ve had an interdependent continental energy market for decades,” said Masson. “The U.S. has refineries in the midwest – that are dependent on oil from the oilsands, that heavy oil and bitumen from oil sands – over 3,000,000 barrels per day – and there’s no substitute for it in the U.S.”
“So if this tariff was imposed, those refiners would have no substitute and they could end up with much higher costs for their gasoline, diesel and jet (fuel), which is inflationary and totally against what President Trump was talking about,” said Masson.
While Yedlin said it’s “really important and we need to be able to come together as a unified front,” to fight the tariffs, Smith also took a shot at the federal government.
“We’ve had our own representation in Washington since 2005,” said Smith. “Increasingly we’ve seen that we are the best proponents of our own interests, and we will continue to establish those relationships,” said Smith. “I very much like to take a Team Canada approach, but I can tell you that, Justin Trudeau hasn’t made it easy.”
Yedlin said we also need to be mindful of what history has taught us about the impact of tariffs and the points to Smoot-Hawley tariffs of the 1930s that resulted in the U.S. slapping crippling tariffs – up to 40 per cent – on all imports from other countries, in an effort to protect domestic workers.
Many economists blame that trade war for worsening the impacts of the great depression.
Yedlin also describes, Trump’s tariff threat as “a bit of a wake up call.”
“We’ve long talked about how we’ve been very dependent on the U.S. economy for our exports,” said Yedlin. “You know, in Alberta’s 90 per cent of our energy exports go south. 78 per cent of Canada’s GDP is exported south. It’s time to change that equation.”
Jacobsen said the possibility of a trade war is also a reminder of the importance of buying local.
“I think its important for Canadian consumers, now more than every, if this tariff comes into place, think of supporting local Canadian brands like us, that manufacture here and create jobs in our local community.”