By Sidney Coles,
Local Journalism Initiative Reporter

American economists have warned Trump’s “America First” plans could cause inflation and possibly a recession, which could have ripple effects in Canada.

BC’s economy is closely tied to our southern neighbour’s, supported, in part, by the Canada-United States-Mexico Agreement (CUSMA). CUSMA came into effect in 2020, replacing the North American Free Trade Agreement. Trump may not challenge the agreement which, among other protectionist moves, aims to benefit American farmers, ranchers, and agribusinesses. Ultimately, he will aim to prioritize American trade advantage and not just support it.

In 2022, the US was BC’s primary export destination. That year, it received 57% of this province’s commodity exports to the tune of $37.4 billion in total export value. Tuesday’s election may steeply change the face of that trade relationship. Those changes may be significant in ways we cannot yet imagine with Trump once again at the helm. Some of those changes will be drawn from his future administration’s guiding 920-page mandate, Project 2025.

Project 2025 is a political initiative published in 2023, by authors from the conservative think tank the Heritage Foundation. Many of them had roles in the previous Trump administration. The mandate envisions sweeping changes to economic and social policies, the federal government and its agencies. The policy document will reshape American bureaucracy and consolidate executive powers across departments such as the Department of Commerce, the Federal Trade Commission and the Department of Homeland Security. If implemented in part or in whole, it will undoubtedly alter the ways America sees its global role and its relationship with us, to the north. BC is resource-rich. It has an abundance of critical minerals, wood products and freshwater.

In fact, comments Trump made during his campaign about “turning on the faucet” in BC to alleviate its domestic water scarcity issues, particularly in California, has environmentalists worried.

California also produces 2 billion dollars of fruits and vegetables that end up on dinner tables in BC.  Year to year, from 2021 to 2024, BC exports to the US have been on the decline. Trump's proposed trade tariff may exacerbate that trend. BNN Bloomberg reported that a Trump global 10% trade tariff—he’s pledged to slap such a tariff on a plethora of US imports—could cause the GDP in Canada to drop 2.4 percentage points over the first two years. It has been assumed by economists at Bloomberg that the tariffs would be eliminated once the United States-Mexico-Canada Agreement (USMCA)  is extended in 2027 but in the interim, it could be quite damaging for BC exporters.

Trump’s nationalist, protectionist stance may underwrite a push to enforce that agreement in ways that are prejudicial in favour of the US. In March 2023, Prime Minister Justin Trudeau and US President Joe Biden issued a joint statement recommitting to the Roadmap for a Renewed Canada-US. Partnership and outlined their plans for the two countries to accelerate the clean energy transition, strengthen North American fuel and critical minerals supply chains, protect shared waters and the Arctic, and advance diversity and inclusion. A sector-by-sector breakdown puts into perspective what is at stake in this election, should that line of goodwill and partnership be broken.

Wood products

The US lumber market is huge. It’s BC’s largest market for lumber and value-added wood products. Mass timber products are in increasing demand south of the border as builders seek alternatives to regular building operations due to increased costs and resourcing challenges. In 2017, Trump affixed a 27% tariff on softwood lumber. In August, Biden increased the duty on softwood lumber to 14.4% from 8%. At the time of that announcement, Bruce Ralston, BC’s forestry minister,  said, “I am immensely disappointed with the U.S. Department of Commerce's decision to increase unfair and unwarranted softwood lumber duties.”

It’s hard to say where those tariffs will land under Trump.

The Tyee has reported that Canfor and other BC sector giants have been selling the bulk of their products there for decades. Recently, Canfor and other forestry giants, including West Fraser, Interfor, and Teal-Jones (think Fairy Creek watershed) have been looking to invest in the southern US because second- and third-growth plantation pines grow faster there and are far cheaper to log, process, and transport.

Minerals

BC firms exporting critical minerals vital for the advanced manufacturing and tech sectors will likely continue to find opportunities in the US. In March, Biden’s Pentagon was promising Canada could apply to a fund of $250 million in cash to producers of critical minerals. BC mining companies working in the green mining and clean tech space will likely continue to find partners in the US.  However, after cutting its budget dramatically during his first term, Trump has promised to dismantle the Environmental Protection Agency, opening the floodgates to mineral exploration in previously protected areas, including oceans. BC mining companies facing pressure to reduce their impact on the environment and engage in sustainable exploration practices as part of corporate social and environmental sustainability and responsibility initiatives may feel they can take the brakes off those efforts in trade with American partners and clients during this forthcoming Trump era.

Electricity

Trade in this commodity between the US and BC is a two-way street. In 2023, 16% of the total electricity demand in BC was imported, owing in great part to an ongoing drought and the impacts of climate change. Luckily for Canada though, export prices of electricity to the US from BC are higher than import prices. They were negotiated largely by Powerex—a subsidiary of BC Hydro—that manages and trades with customers through the Western Electric Coordinating Council (WECC).  In 2023, BC electricity export prices sat around $168/MWh (megawatts per hour) and import prices around $92/MWh giving the value advantage to BC. The tables turned that year when BC began importing electricity from California, which translated into what one researcher has calculated as a $400 million dollar loss against its $1 billion profits the previous year.

Automotive

The US dominates our regional vehicle market. Roughly 35% of all car imports into BC are American-made. Japan manufactures 18% of cars on BC roads. In June, Canada hit Chinese electric vehicle makers with a 100% surtax to stave off unfair advantage. In April, BC also banned fully automated self-driving vehicles. Trump’s “Made in America” gambit may make even more American cars available to Canadian drivers. A Trump presidency could see more aggressive support for Michigan makers such as Ford and General Motors as well as Elon Musk’s Tesla. Trump would likely roll back environmental regulations and standards such as the Corporate Average Fuel Economy standard that came into effect in August under Biden. The jury remains out on whether those standards make cars more expensive, though one recent consumer report analysis says it doesn’t.

Gasoline (fuel)

Trump has repeatedly called to “Drill, baby, drill.” Trump would roll back green regulations that hinder current oil gas and coal extraction production there. While BC gets a large percentage of its gasoline from Alberta, Chevron and Esso (Exxon Mobil) will continue to be major suppliers of fuel to Vancouver Island and the rest of the province.

Oil and Gas

Trump is an oil man. Big Oil contributed at least $75 million to the Trump campaign through PACs. Canada exported more than 80% of its total oil supply to the United States in 2023. Beginning this year, the Trans Mountain Expansion Project (TMEP) significantly increased Canadian oil exports to the US West Coast. Supertankers with TMX oil began moving through the Salish Sea and the Strait of Juan de Fuca this spring. Trump’s universal tariffs would impact those exports. Canada, the world’s fifth-largest producer, remains a player in a declining LNG market and is not as dependent on the US as it is on other global customers. A flurry of pipeline approvals and construction in BC in recent years has raised its resource portfolio but global trends in LNG demand seem to be declining. Its pipeline glut may pose significant risks to the province in a world where many governments are moving away from fossil fuels and price volatility is on the rise.

In 2023, Canada exported roughly 45% of its natural gas supply to the United States. That likely won’t change, though Trump tariffs may lessen further the southern flow of that resource.

Climate

Trump’s 2020 withdrawal of the US from the Paris Agreement could set the groundwork for a second administration’s de-prioritization of climate research, action and abdication from participation in global climate negotiations. Climate action does have some bipartisan support and opportunity at the state level to grow through the Inflation Reduction Act and Bipartisan Infrastructure Law, however, there is a cadre of climate deniers among Trump’s supporters who may thwart their efforts at the national level. Despite the province’s recent record-breaking wildfires (2023), drought and reduced snowpack levels, they will find bedfellows in BC Conservative climate deniers and NDP supporters of the fossil fuel industry.

Tourism

American travellers account for roughly 20% of visitors to Victoria and spend 70% more than domestic visitors.  An exchange rate of .072 makes it appealing to shop and save, even on day trips to BC from Washington state. Destination Greater Victoria recently ramped up its marketing efforts in Seattle and will do parallel work to support the efforts of Destination Canada in California, Texas, New York, and Boston. Destination BC offers development assistance in its partnerships with Indigenous Tourism BC and the Ministry of Tourism, Arts, Culture, and Sport. A potential inflationary response or a recessionary outcome to Trump economic policy would impact tourism levels and spending in BC, but we may not see that for at least a year or more.

Agriculture and Seafood

 BC, and more specifically, Vancouver Island, imports far more food than it exports. Up until the 1950s, 85% of food was grown locally on the Island. In 2019, that number had dwindled to only 10%. Trade and Invest British Columbia shows 9,635 people on Vancouver Island employed in the agrifood and seafood industry. Approximately 60% of BC’s shellfish is exported to the US. Little was done by the Biden administration to curtail interception fishers in Alaska from absconding with an estimated 18 million BC salmon and steelhead. It’s hard to imagine Trump will do better.

Immigration

 From the previous year, the number of people arriving at airports in BC to file refugee claims doubled in 2023. Last March, Canada and the US agreed to the first major change to the Safe Third Country Agreement (STCA—which allows for the return to the US of persons who arrive in Canada from the US and vice versa), in two decades. The change expands its terms to the entire land border rather than just formal crossings. Like Trudeau’s government, the Biden administration was supportive of immigration and wanted to see more conservative policies applied to the current situation at its southern border. Canada is set to reduce permanent residents by 21% by next year. Harris had been working to address the “root causes” of immigration from Central and South American countries to stem the growing tide of migrants at the US border.

While on the campaign trail, Trump repeatedly pledged to deport at least 10 million undocumented immigrants back to their home countries and has openly discussed building migrant detention camps. That policy could mean a significant rise in “refugee” claimants from the US in BC, particularly among migrant workers from California, that some worry could overwhelm border and social services.

Members of the American 2SLGBTQ community may also begin to arrive in BC as asylum seekers in the face of rising anti-queer/trans sentiment and anti-trans laws coming into effect there. A total of 662 anti-trans laws have been drawn up in 43 states, 45 of which have passed—-125 are active. In 2023 alone, 53 bills were introduced at the federal level about service to trans people in healthcare, employment, student athletics, education, and incarceration. A Harris win would have felt more status quo to BC residents. The province could see major shifts in trade and immigration policies that will have far-reaching impacts in both the short- and long-term with Trump's win.