Canada Has An Uphill Battle, But Can Learn Lessons from a US Trade War

Canada is under attack. U.S. President Donald Trump has singlehandedly launched a massive economic strike against us, triggering a trade war that will shake our economy. There is no upside to this costly and bitter dispute; only a hard lesson for Canada on the need to remake our economy and diversify our trade.

With one low blow, Trump has redefined Canada/U.S. relations. Just weeks into his presidency, Trump signed an executive order, imposing tariffs of 25 percent on imports from Canada and Mexico, 10 percent on China, and 10 percent on our energy resources. While Trump has delayed imposing tariffs on Mexico for another month, they go into effect in Canada on Feb 4. This upends a 150-year trading relationship between our two countries which were close friends and allies. That’s over, at least for now. Until our countries find common ground, the implications for Canada are brutal.

Trump’s punishing tariffs, could plunge us into a recession. This hefty tax will rock every sector of our economy including the industry that takes the lead in building Canada. Tariffs, depending on how long they last, are likely to have a profound impact on construction, disrupting supply chains and increasing material costs. This could result in potential layoffs and the delay or cancellation of projects like hospitals, highways and transit that are needed to support our growing communities.

But rather than fixating on how bad things could get, the focus should be on how Canada can build its way out of this economic tailspin.

The place to start, is creating policies that insulate Canada from trade risks. What’s required is a complete 180, with the federal government taking a unified, pragmatic and unapologetic approach to stewardly maximizing resource development. Canada desperately needs legislative reform, in particular with respect to the speed and efficiency of regulatory approvals. We need to get projects built, not bury them, as witnessed with the Energy East and Northern Gateway pipelines as well as the Frontier Oilsands Mine. These projects amount to billions in lost investment that would have generated jobs, taxes and business opportunities needed to grow our economy.

However, it’s not too late for Ontario’s Ring of Fire. Considered one of the most promising mining developments in Canada this century, it could generate more than 5,000 jobs a year, and 25 billion in GDP over the longer term. The Ring of Fire contains valuable minerals to produce steel, copper and electric batteries. Governments at all levels must find a way to work with Indigenous communities to keep this project on the rails. Canada can’t afford another lost opportunity.

Regulatory change should also ensure that all major public projects are openly tendered. Encouraging construction competition improves productivity, and lowers costs. This maximizes investment and helps get more projects built. That’s the way forward.

So is reducing our reliance on the U.S., which means forging new trading partnerships. That’s happening slowly, but needs to demonstrably expand. The first cargos of liquified natural gas from Kitimat B.C., are set to arrive in Asia this year. The Trans Mountain Expansion project (TMX) is allowing Canada to diversify its customer base and reach new markets in Asia. As a key supplier of critical minerals, Canada has plenty of opportunity to form new alliances with countries such as Europe and South America, and in particular with Australia, France and Chile, which have signed joint statements with Canada on shared priorities for critical minerals

There’s also a lot Canada could do to improve trade between our provinces. Reducing internal barriers would make it easier to move construction materials, labour and capital from one province to another. Not having to navigate different provincial regulations and standards would help keep large scale projects on time and budget. That’s attractive to investors, and could generate $150 billion for the Canadian economy.

As our trading relationship with the U.S. unravels, our federal and provincial governments should be working together to develop a coordinated strategy to attract domestic and international investment. The aim should be to ramp up oil, gas/LNG, and precious metals capabilities including new mines, processing facilities, pipelines, ports, and all utility corridors. This is a nation building exercise to get major projects built, improve interprovincial trade, and get our resources to global markets.

By leveraging Canada's abundant natural resources, modernizing trade policies, and embracing practical, pro-business reforms and legislation, we can emerge as a global leader in sustainable infrastructure, industrial growth, job creation, and affordability.

The construction industry will play a pivotal role in re-energizing Canada, attracting investment and ensuring long-term prosperity. The best way to “stand strong” against a bully, isn’t a tit-for-tat trade war. It’s by broadening our horizons and building a stronger economy.