Tariffs continue to threaten N.B. economy and bottom line

N.B. Premier Susan Holt says the U.S. tariffs could be felt in next week's provincial budget.

With tariffs officially hitting Canada, the uncertainty that surround them is being felt from all angles in New Brunswick.

“As an overall point, we know that our relationship with our most important trading partner has changed, so that’s the reality,” said Fredericton Chamber of Commerce CEO Morgan Peters. “Regardless of the specifics that come out tomorrow or the day after or April 2, that era of uncertainty is the new normal for an extended period.”

Peters says he’s suggesting local business look at short-, medium- and long-term efforts and focus on strengths within the province.

Marc Lee, senior economist with the left-leaning Canadian Centre for Policy Alternatives predicts tough times ahead.

“I think day after day now we’re starting to see an escalation in the trade war,” he said. “It’s not just words anymore, but it’s sort of a tit for tat, back and forth increases and it’s going to be terrible for the Canadian economy if this continues.”

Overall he says there are two main aspects: the actual impacts of the tariffs themselves and the impacts of the retaliatory measures. He says both have an impact on the business climate.

“Businesses that couldn’t pivot and export to Europe and other parts of Canada or Japan instead will be in a very different position than some of these businesses specifically aimed at producing for the U.S. market, but I think we are starting to see announcements come,” said Lee.

In New Brunswick, one of the biggest impacts could be seen as early as next week in the provincial budget.

Premier Susan Holt has stated these tariffs make it difficult to balance the budget, going as far to say that the province is projected to see a drop in revenue of 30 per cent if the across-the-board tariffs come into effect.

“I think because you’re looking at an economic downturn, provincial government and the federal government probably even more importantly, but the provincial governments also need to be thinking about, you know, ‘We need to run a deficit and invest in capital spending right now to inject money into our economy to sort of keep things from getting a lot worse,’” said Lee.

He notes British Columbia just tabled a fairly large deficit that increases capital spending to make it available if needed during this time.

“We see that New Brunswick relies heavily on exports to the United States, so some provinces have more impact than others,” said Murshed Chowdhury, an associate professor with the University of New Brunswick. “Some industry have more impact than others, so if you look at measures that we need to take, that’s not necessarily the broad measure, the same measure, for all.”

At the moment, Holt says the only tariffs in New Brunswick are on aluminum and steel and while she hasn’t ruled out charging a surtax on energy to customers in Maine, she says it would be a last resort.

“We’re connecting with the people of Maine from whom we both sell power and buy power. We have a relationship that goes both ways and so that option is on the table, but we’re not prepared to use it yet,” she said.

The Fredericton Chamber of Commerce says its also looking at its relationship with Maine and encouraging its members to focus on shared values across the border.

“Chambers of Commerce New Brunswick are currently speaking to Chambers in Maine where we’re planning some joint advocacy together, some joint events to really demonstrate that that’s a really important relationship, we have a lot in common, we will get through this,” said Peters. “We’re encouraging members to diversify markets, that’s always a good idea regardless of what’s going on externally, but we have a lot of friends, we have a lot of interconnections with Americans and that’s going to remain the case.”

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