CANADA, January 16 - As B.C. continues to fight against threatened United States tariffs of 25% on all Canadian imports, the Province has done a preliminary assessment of potential impacts to the B.C. economy of a trade war with the United States.
In president-elect Donald Trump’s tariffs scenario, B.C. could see a cumulative loss of $69 billion in economic activity between 2025 and 2028. The Province’s real GDP is projected to potentially decline by 0.6% year over year in both 2025 and 2026.
Job losses are estimated at 124,000 by 2028 with the largest declines in natural-resource sector export industries and associated manufacturing. Losses would also be felt in the transportation and retail sectors. The unemployment rate could increase to 6.7% in 2025 and 7.1% in 2026, and corporate profits could see an annual decline in the range of $3.6 billion to $6.1 billion.
Tariffs imposed by the United States, along with potential retaliatory measures, could impact many of the Province’s key revenue streams, such as personal and corporate income taxes. Preliminary analysis indicates this could reduce annual revenues by between $1.6 billion and $2.5 billion.
This preliminary assessment, done by the Ministry of Finance, is one of many possibilities as there is considerable uncertainty about the exact nature, magnitude and timing of United States policies that may be implemented.
In 2019, the Bank of Canada estimated the impacts of a 25% tariff. National Bank recently reported that the Bank of Canada’s estimate of the Canadian GDP impact “would exceed that of any previous recession, barring the temporary setback at the onset of the COVID-19 pandemic.”
In the face of this uncertainty, the Province is using a three-part strategy: respond, strengthen and diversify.
To respond to these tariffs, B.C. is engaged in contingency planning across government and will participate in nationally co-ordinated retaliation if and when required. B.C. will strengthen its domestic position by growing the economy to create high-paying jobs to generate the wealth needed to support people through strong public services, such as health care and education. This includes fast-tracking permitting in B.C. and reducing trade barriers between provinces. Lastly, B.C. will focus on diversifying its trade relationships, using the Asia-Pacific network to become less reliant on exports to the United States.
Quick Facts:
- On Nov. 25, 2024, president-elect Trump proposed tariffs of 25% on all Canadian and Mexican imports to the United States, and an additional 10% on imports from China.
- Premier David Eby has met with several state governors and impressed upon them the devastating impacts tariffs would bring on both sides of the border. He and other premiers will travel to Washington, D.C., on Feb. 12, 2025, to continue to make the case against unjustified tariffs for all Canadians.
- The ministry's preliminary assessment is based on internal planning assumptions, including that a 25% U.S. tariff would remain in place for the duration of the Trump presidency and that Canada retaliates as well as key economic indicators and inputs, including economic activity, trade, the labour market and demographics.
- The analysis does not represent the Ministry of Finance’s economic and budget forecast, which is under development and will be released as part of Budget 2025.
- The Minister of Finance will also consult with the Economic Forecast Council in late January. The Economic Forecast Council is comprised of leading economists from across Canada. Advice from the Economic Forecast Council will be reported in Budget 2025.
