Brace for impact: Northern leaders get ready to deal with Trump's threatened tariffs

With Donald Trump's return to the White House days away, Northern politicians and business leaders are clinging to hope that Canada can avoid a potentially ruinous tariff battle with the United States.

Trump has threatened to slap a 25-per cent tariff on Canadian goods, a measure aimed at strong-arming Canada (and Mexico, which faces a similar tariff-threat) into tightening border security and stemming the flow of illicit fentanyl into the U.S. 

Yellowknife economist Graeme Clinton said should the tariffs go through, consumers are likely to notice the impact right away.

"The first thing will happen is prices will go up in the United States," he said. "This will have all sorts of knock-on effects there, but also, because we do so much trade with the US, the costs of imports for our imports back into Canada will get more expensive. And so there will just be a general rise in prices overall."

Data from the Canadian Chamber of Commerce shows Canada does $1.3 trillion worth of two-way trade every year with the United States. That's why business and political leaders alike in this country are scrambling to try to talk the Trump administration, which takes office Monday, into backing off.

The three territories combines do $233 million worth of trade with the United States every year. The vast majority of that, $150 million, involves the Yukon.

Luke Pantin, executive director of the Yukon Chamber of Commerce, said Canada needs to be polite but firm in its approach.

"If we are given a slap in the face, we may just have to slap back, but what we're saying is that let us enter this in a very harmonious, cordial way that we want this to be resolved without the unilateral imposition of tariffs," he said.

Prime Minister Justin Trudeau and 12 of the 13 premiers signed a statement Wednesday vowing a unified response should Trump's threat come to pass. That could include retaliatory tariffs or cutting off certain exports. 

Alberta Premier Danielle Smith was the lone holdout, upset over Ottawa's refusal to rule out shutting down energy exports to the U.S. as a possible retaliatory measure.

Meanwhile, B.C. premier David Eby has openly mused about cutting off critical mineral exports to the U.S. as a way to strike back.

Like Pantin, Jonas Smith with the Yukon Chamber of Mines is also preaching calm in the face of possible tariffs. But he also said there are plenty of other countries that would happily buy critical minerals from the Yukon.

"The need for not just critical minerals, but all minerals is global," he said. "It's not specific to the United States.... . And the Yukon is uniquely poised because we have 27 of the 34 critical minerals on Canada's list. And for example, a number of our advanced exploration projects right now have deals with Asian countries."

For now at least, it's a theoretical exercise for the Yukon. There are no active critical mineral mines in the territory, but there are exploration projects in the works. One is the Mactung project, one of the world's largest deposits of tungsten.

The U.S. and Canadian governments are putting $35 million into pre-development work at the site, owned by Fireweed Metals. The idea is to help secure a nearby source of the critical mineral, the market for which is controlled largely by China.

But the Northwest Territories could conceivably be hit by a critical mineral export ban. Its Nechalacho rare earth elements mine is already shipping stockpiled minerals to market and plans to expand. The territory's diamond industry could also end up at risk.

N.W.T. Premier RJ Simpson said this week that his territory is less exposed than other provinces and territories, given its small economy and lack of a border with the States. But he said tariffs would still hit N.W.T. residents hard, citing one estimate that tariffs could raise the average price of an airline ticket by $200.

Still, Simpson, like the other premiers was, at least in public, trying to put on a brave face. 

"We will do what we can, just like all other jurisdictions in Canada are going to do," he said. "And it could be things as small as, depending on how things roll out with the tariff, making sure that we are sourcing goods from Canada or from countries other than the United States."

Pantin, with the Yukon Chamber of Commerce, said now would an ideal time to once again look at action to break down internal trade barriers. That's a longstanding issue in Canada that predates the current uncertainty by decades.

"We do believe that that we need to spend some time focusing on addressing the geographic barriers internally so that we can increase the yield on our own GDP," Pantin said. "And we estimate that if we begin doing that seriously, it could generate more than about $18 billion [per year]." 

For now, few outside Mar-a-Lago know what will actually happen on the trade front until Trump is sworn in Monday. And while Northerners may not have much economic leverage, they will have to cope with the fallout of whatever happens next.