A diplomatic solution would be the ideal outcome to the looming U.S. tariffs, according to Bram Strain, president and CEO of the Business Council of Manitoba.
Strain will be representing 100 of Manitoba's largest employers in his role on the Province's new U.S. Trade Council, made up of 16 of Manitoba's industry leaders, to support preparations for the tariffs.
He says they want to understand the tariffs' impact and where they could be mitigated or combatted.
"If they're willing to put a 25 per cent on, that increases the cost of that project in the U.S. (and) that's not ideal for a number of reasons, including for the consumer because that's going to drive inflation up," said Strain. "That said, that could also have an impact on Manitoba businesses who ship to the U.S. with reduced orders, etc. which could have an impact on the workforce."
Strain added, these discussions also include how the tariffs will impact each side.
"It's easy to say that you put a tariff on and, hence, you're going to have people more interested in buying U.S. products because Canadian, Mexican and Chinese products will be more expensive which, with today's global impact, that's not the way it works," he explained. "There's many companies in Canada, New Flyer (Industries), for instance, who does a large amount of their assembly of their buses in the United States from a product that originates in Canada. So, there's jobs on both sides of the border would be impacted. So again, it's not just U.S. consumer pricing, it's actual U.S. jobs that could be impacted by putting that tariff on. And if the idea is to onshore or get more companies to set up in the United States, that will be years and years in the making and, in some cases, it just doesn't make sense globally.
So, to explain that case, [...] quite frankly, we haven't had to do that in a very long time, because we've just been good neighbours and good partners. This has never threatened us like it's threatening us currently."
A diplomatic solution, according to Strain, could also include adjustments to the current Canada/U.S./Mexico Free Trade Agreement.
As for what members of the Business Council of Manitoba are saying as the February 1st tariff timeline draw near, Strain says there's a bit of split.
"They're literally split internally amongst themselves. There's a group of people that are very worried about any tariffs, whether that be a 25 per cent tariff or 10 per cent. So, they're running various scenarios. They're becoming prepared for, what happens if you put a 10 per cent product tariff on versus 20? Those are very different numbers and, some of them, they can mitigate through productivity. Some of it they can do finding another market to sell into, something they can do with some price adjustment.
That said, there's others that, if this hits the vast majority of their products that get put into the United States, this will have an actual hard material impact on that business."
What does have a lot of members talking, however, noted Strain, is productivity and interprovincial trade barriers.
"I think those are two topics that we've avoided for a little while. We have some of the lowest productivity rates. Canada's an industrialized nation. So, we need to get those (rates) up. And number two, we have a lot of inter-provincial trade barriers which prevent us from trading with each other sometimes. So, if we can get rid of those things, there's a bit of something that we can internally control."