According to Statistics Canada data, more than $16.2 billion in goods were imported to the national capital region in 2023, with more than $8 billion of that total originating from the U.S.
As Canadians everywhere ice their necks from the whiplash of U.S. President Donald Trump imposing tariffs on billions of dollars in Canadian goods, only to remove them days later and threaten to re-impose them in April, Ottawa may be insulated from the worst economic effects of a protracted trade war.
“There’s no region or city or province that is going to be spared from the impact of tariffs. It’s a dire situation across the whole country,” Richard Forbes, principle economist with the Conference Board of Canada, said in an interview on Thursday just moments before news that Trump had walked back a 25 per cent tariff on Canadian goods and a 10 per cent tariff on Canadian energy.
Trump now says Canada and Mexico will be exempt from steep tariffs until April 2.
Forbes said about 25 per cent of jobs in Ottawa are in the public sector, an industry that will be largely shielded from the impact of a trade war.
“Compared to other cities, Ottawa should be somewhat immune to tariffs,” Forbes said. “The story around Ottawa is that purchasing power will decrease.”
Canada and the United States seemingly plunged into a trade war just days ago after Trump’s tariffs on Canadian goods came into effect and Prime Minister Justin Trudeau immediately imposed 25 per cent tariffs on $30 billion worth of American goods, with an additional $125 billion of goods set to be tariffed in 21 days.
Trudeau called Trump’s trade war “dumb” and said it was designed to collapse Canada’s economy in order to annex the nation as the 51st U.S. state.
According to Statistics Canada import data, more than $16.2 billion in goods were imported from around the world to the national capital region in 2023, with more than $8 billion in goods originating from the U.S. Approximately $7.5 billion in imports came from outside the U.S.
Evening Update
Tariffs on goods imported from the U.S. means the cost of many items will increase, and the cost of running businesses will also go up, Forbes said, though wages will not increase.
“As prices go up, households will have less spending power.”
Notably, Ottawa imports significantly less from the U.S. than other major Canadian cities. In Toronto, more than $120 billion in goods was imported from our southern neighbours. In Montreal, the value of U.S. imports was around $33 billion, and in Calgary $26 billion worth of goods was imported from the U.S.
Jennifer Quaid, a law professor at the University of Ottawa, says the capital region’s most distinguishing factor is that the federal government both purchases and provides services and “has the power to choose where it makes things.”
The federal public service, as the region’s largest employer, could look to Canadian companies for procuring goods and services.
“One challenge for Canada is it’s always nice to say in theory, but to what extent can services be provided by Canadian companies based here in Canada with Canadian employees?” Quaid said, noting some services, like IT, are provided through global companies.
“The biggest employer in the region might have to think about it in terms of how they go about sourcing things,” she said in a recent interview.
Sueling Ching, president and CEO of the Ottawa Board of Trade, said the threat of tariffs could be more damaging than tariffs themselves, with a pall of uncertainty making business investors and the Average Joe alike less likely to invest and more likely to keep their dollars close to home. That, too, can trigger a economic slowdown or recession.
Bank of Canada governor Tiff Macklem has warned Trump’s tariffs could cut investments in the Canadian economy by 12 per cent and Canadian exports by 8.5 per cent in the first year. The central bank also says Canadian growth could decline by three per cent over the next two years, with the Canadian economy unable to bounce back from a lengthy trade war.
Forbes agreed the outlook was stormy across Canada, though Ottawa may fare better than average. He noted the federal public service nationwide was expected to shrink by 5,000 jobs over the next three years, largely through attrition, as the feds tighten their belt and rein in spending.
But, he added, “every two minutes there’s news coming out, so we could have a different story tomorrow.”
With files from Financial Post
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