Calgary business leaders breathe sigh of relief as tariffs put off — for 30 days

Calgary business leaders welcomed a late, temporary truce in the looming trade war between Canada and the United States announced Monday afternoon by Prime Minister Justin Trudeau.

In a statement posted to social media following a second conversation of the day with U.S. President Donald Trump, Trudeau said proposed tariffs will be paused for 30 days while Canada implements $1.3 billion in border reinforcement measures.

Mexico’s president, Claudia Sheinbaum Pardo, announced a similar 30-day pause on tariffs on her country earlier in the day, after she promised to deploy 10,000 Mexican soldiers at the U.S.-Mexico border.

“(It’s) good news for hundreds of thousands of Canadian families, and many in Calgary, too, who will sleep a little easier, at least for a few nights,” Scott Crockatt, Business Council of Alberta vice-president, said in a statement.

“As we’ve said, free trade must be the priority. Diplomacy and addressing issues and irritants should be our focus. And Canada cannot let off the gas of improving our own internal issues like interprovincial trade, infrastructure approvals and investment conditions.”

Canada’s plan includes appointing a “fentanyl czar” who will be responsible for reinforcing the border with new helicopters, technology and personnel to stop the flow of drugs over the U.S.-Canada border.

Canada will also list cartels as terrorist organizations and launch a joint strike force with the U.S. to address organized crime, fentanyl and money laundering, according to Trudeau.

The prime minister said he has also signed a new intelligence directive on organized crime and fentanyl, which Canada will be backing with $200 million.

“Nearly 10,000 front-line personnel are and will be working on protecting the border,” Trudeau wrote.

“Proposed tariffs will be paused for at least 30 days while we work together.”

The about-face followed Trump’s signing of executive orders Saturday to impose 25 per cent tariffs on goods imported from Mexico and Canada into the U.S., with smaller 10 per cent tariffs on Canadian energy products. The threatened tariffs were to take effect Tuesday.

Trump said the measure was in response to Canada’s failure to police its border and keep illegal drugs such as fentanyl from entering the U.S.

That resulted in countermeasures from Canada, with Trudeau announcing Saturday that Ottawa would impose retaliatory tariffs on $30 billion worth of imported goods originating from the U.S. — from furniture and appliances to cosmetics, tires, plastic and wood products.

Tariffs, retaliation bad for both countries: BCA vice-president

While the tariffs have been put on hold, the threat of an unprecedented trade war between Canada and the U.S. still looms.

And just as there are casualties on both sides during a military conflict, nobody would really win in a fight between the U.S. and Canada, Crockatt said, adding the tit-for-tat tariffs the two countries were planning would have harmed both economies.

He noted Calgary would be slightly less exposed to the threat of tariffs than other Canadian cities, due to the high concentration of oil and gas businesses, which were only going to face a 10 per cent duty on exports.

But he said other prominent sectors in Calgary and area would be particularly hamstrung by U.S.-imposed tariffs, such as agriculture and industrial manufacturing.

“While we might think of places like Ontario and Quebec as having a lot of Canada’s manufacturing, Alberta does as well,” he said. “There’s actually quite a lot of industrial manufacturing in Calgary. All you have to do is head to southeast Calgary and you’ll see manufacturing done for industrial settings, oil and gas facilities, steel manufacturing and that sort of thing.

“Those are jobs that tend to be very sensitive and elastic to changes in trade.”

Trade war would create uncertainty in construction: CCA president

Calgary’s construction sector was also nervously awaiting the arrival of tariffs.

The president of the Calgary Construction Association said before Trudeau’s announcement that many building products, particularly in the commercial construction sector, are from U.S.-based suppliers.

“Our economy is heavily integrated, as has been said by other sectors, and the construction industry is no different,” said Bill Black.

“There are products that are made in Canada, sold to the U.S., then assembled into products that are sold back into Canada, so you could see double tariff tension in some areas.”

A trade war between the U.S. and Canada would create uncertainty in the construction sector, demonstrated by contractors disengaging from projects or choosing not to bid on essential infrastructure, such as schools or hospitals, Black added.

Another possibility is project owners delaying or postponing construction, which causes economic momentum to stall and costs to go up.

“The ripples get very complex in an integrated economy and, frankly, a completely integrated supply chain globally,” Black said.

Alberta Premier Danielle Smith said she was heartened by the announced pause on tariffs.

“Diplomacy has won the day. Let us ensure that continues, as we know there is much more work ahead of us,” she said in a statement.

Smith said Ottawa and Canada’s premiers need to “de-escalate rhetoric, abandon any non-tariff measures for the time being, and turn our efforts entirely to advocacy and good-faith negotiation.”

The late reprieve was also welcomed by the Canadian Association of Petroleum Producers, whose members avoided Trump’s planned 10 per cent energy tariff.

“Instead of tariffs, we should be working together to expand our energy trade and grow oil and gas production from both countries with the goal of exporting more Canadian and American energy to our global allies,” CAPP president Lisa Baiton said in a statement.

“Working together on expanding energy production and trade means everybody wins.”

A recent report from the Canadian Chamber of Commerce in November predicted a 25 per cent retaliatory tariff, applied across the board on all U.S. imports, would shrink the Canadian economy by 2.6 per cent (or roughly $78 billion) and push Canada into recession by the middle of this year.

A trade war would also cost Canadians approximately $1,900 a year per person, according to the report.

“Make no mistake, if Trump imposed these tariffs, it would represent a significant negative shock to the U.S. economy,” said Stephen Tapp, the chamber’s chief economist.

“It would raise costs for businesses, make American production less competitive internationally, and raise prices even more for consumers who’ve recently suffered through the pandemic and the highest inflation in generations.”

sstrasser@postmedia.com