U.S. President Donald Trump announced Monday that sweeping tariffs on Canadian imports will go into effect starting Tuesday.
Kent Fellows, an economist with the University of Calgary’s school of public policy, said Alberta could take a big hit, not just from Trump’s tariffs, but from Canada’s retaliatory tariffs as well.
Speaking to reporters in Washington on Monday, Trump confirmed his 25 per cent tariffs on all goods coming in from Canada and Mexico will go ahead, with a lower 10 per cent rate for Canadian energy imports.
Trump originally announced the tariffs would go into effect on Feb. 4, but deferred them for a month after Canadian and Mexican officials promised to take steps to stem the flow of drugs and illegal immigrants across their respective borders, which Trump said was the reason behind his tariff threats.
Economist, Kent Fellows, said Alberta and the rest of Canada may be plunged into a recession from the impact of Donald Trump’s tariffs.
Global News
Fellows told Global News that while it’s difficult to figure out exactly what Trump’s strategy is here, Alberta and the rest of Canada could be “staring down the barrel of a potential recession.”
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The threat will quickly turn local economies in places Calgary, Edmonton, Lethbridge and many other cities into ground zero for the impacts.
But at least one business owner is trying to find the silver lining in the ever-evolving situation.
“If Canadians and Canadian retailers really get behind Canadian brands, if a brand is manufactured here, and employs local people… I think this could be a net positive,” said Mitch Jacobsen, owner of Rviita Energy Tea.
The Calgary-based business has been selling its healthy energy drinks for about five years now, and since landing a contract with Costco in January, its northwest facility has been busier than ever.
“With Costco, we took a big risk and put ‘Proudly made in Calgary Alberta’ all over the packaging,” Jacobsen said.
“That was one of the best things we’ve ever done, because we’ve had lots of people say, ‘I’ve exclusively tried your product just because it’s made in Canada, and I want to support a Canadian brand.’”
Jacobsen said his team tried as best they could to source as many Canadian ingredients as possible, but some will still come from the U.S.
“Certain flavours, vitamin blends… there are some Canadian suppliers, but it takes some time. You have to do testing to switch suppliers, so there’s going to be a lag there where you’re going to get hit.”
But he’s confident retailers will start to see the value in providing Canadian-made products on their shelves, based on what he’s heard from consumers.
While he expresses some optimism for the Canadian side of his business, he says tariffs will put a limit on how much his company can grow.
“Part of being a Canadian company is expansion plans to the U.S. eventually, so we’ve effectively taken that off the table in the short term,” Jacobsen said.
Currently, Rviita only sells their products to U.S.-based consumers on Amazon, and has no choice but to pass the tariffs on to the customer.
“It’s a relatively small piece of our business right now but it was expected to be a very big piece. I don’t want to say it’s effectively disappeared overnight, but pretty close.
“With these tariffs, our retail price is going to be less competitive.”
U.S. President Donald Trump confirmed Monday that sweeping tariff’s against Canadian and Mexican imports will go ahead starting Tuesday.
THE CANADIAN PRESS/AP, Manuel Balce Ceneta
Not only will the tariffs have an impact on consumers and businesses, but Fellows said it will also have an impact on provincial government revenues.
“Depending on how you count it, natural resource revenues in the province account for one in every four, one in every five dollars of provincial revenue,” said Fellows.
“So it could be a really big hit to the provincial government — and I think the province is worried not just about what the United States is doing, but about what Canada wants to do in terms of retaliation.”
On Tuesday, the provincial government released next year’s budget, and depending on the impact of the tariffs, it’s forecasting a deficit between $2.9 billion and $8.7 billion.
Fellows said the lower 10 per cent tariff on energy products will help lessen the damaging effects of a trade war on Alberta, but he added there are other industries in the province, too, like the lumber industry, where the tariffs “could have a pretty serious impact.”
On Saturday the U.S. government warned Canadian lumber imports could face a tariff of around 27 per cent.
Trump has also promised tariff’s on agricultural imports starting on April 2, 2025.
While governments have promised help for those industries that will be affected, Fellows said deciding what that support looks like will be tricky because “paying for supports requires revenue, and the tariffs are limiting the amount of revenue — by suppressing economic activity.
“The dollar is going to take a hit. Imports are going to become more expensive. So I don’t envy anyone the task of trying to figure out what those supports look like.”