As Canada-U.S. trade tensions grow, New Brunswick faces an uncertain economic future
New Brunswick businesses are navigating a changing relationship with Canada’s largest trading partner as tariffs and trade tensions continue to reshape cross-border commerce.
That uncertainty was discussed by three St. Thomas University (STU) professors, but the bigger question is what a prolonged trade dispute could mean for a province whose economy is closely connected to the United States.
From forestry and manufacturing to agriculture and energy, New Brunswick businesses rely on access to U.S. markets. The ongoing dispute is raising questions about whether the province and the country need to diversify where they sell their goods — and how quickly that can happen.
The Political Science Department and the Department of Journalism and Communications hosted a public forum Sept. 23 featuring political science professors Tom Bateman and Shaun Narine and journalism and communications professor Jamie Gillies.
The discussion focused on Canada's response to U.S. tariffs, the country's attempts to diversify its trading relationships and the longer-term political and economic consequences of the dispute.
Narine argued that Canada was right to walk away from recent negotiations with the United States, saying the terms being sought by the U.S. would have given Washington too much influence over Canada's trade relationships with other countries.
He also argued that Canada has economic tools it can use in negotiations and should be prepared to accept some economic costs if it wants to maintain greater independence in its trade policy.
Canada has continued to respond to U.S. tariffs with counter-tariffs.
As of Sept. 8, Canada imposed new tariffs of 15, 25 and 50 per cent on selected U.S.
products, covering approximately $27.6 billion in imports. The measures target products including steel and aluminum, dairy, appliances, agricultural equipment, pulp and paper and electronics.
For Narine, the dispute also raises questions beyond tariffs.
He argued that Canada's response needs to consider the country's long-term political and economic relationship with the United States, rather than treating the current conflict as a temporary disagreement.
Bateman came in from a different perspective, emphasizing Canada's geographic and economic dependence on the United States.
While Canada is looking toward Europe and other markets, Bateman questioned how much that diversification can realistically replace the economic relationship Canada has with its southern neighbour.
Canada's trade with the U.S. remains significant despite the current tensions. The federal government says approximately 85 per cent of Canada's exports to the U.S. remain tariff-free, while the two countries continue discussions over trade and the upcoming Canada-United States-Mexico Agreement (CUSMA) review.
Bateman also pointed to vulnerabilities in Canada's internal economy, including barriers to trade between provinces and Canada's infrastructure.
He used Canada's energy system as an example. Much of Canada's energy infrastructure is oriented north-south toward the United States, meaning that shifting Canadian resources toward other international markets can be difficult even when those markets exist.
The question of diversification was also central to Gillies' presentation.
Gillies argued that the current conflict could accelerate Canada's efforts to develop stronger economic relationships outside the United States. He pointed to Europe as one potential area for greater trade and investment, while also discussing Canada's relationship with countries such as China.
He said Canada's dependence on the U.S. has been a longstanding structural issue rather than something created by the current trade dispute.
The federal government has similarly identified trade diversification as a priority and has introduced programs intended to help Canadian businesses adapt to disruptions caused by tariffs.
In August, the government announced an additional $7.5 billion in measures supporting workers and businesses affected by U.S. tariffs, including $1.5 billion through the Regional Tariff Response Initiative.
But the professors disagreed on how easily Canada can move away from its traditional economic relationship with the U.S.
For Bateman, geography remains a major constraint. Canada shares the world's longest international border with the United States and the two economies have developed extensive supply chains and infrastructure connecting them.
Gillies, meanwhile, suggested the current crisis could create an opportunity to address Canada's longstanding lack of economic diversification.
The discussion also touched on Canada's ability to attract investment, develop infrastructure and build industries capable of competing internationally.
The trade dispute has already changed some investment patterns. Statistics Canada reported that Canadian investors sold $31 billion in U.S. shares in July, while Canadian investors reduced their overall foreign securities holdings by $30.6 billion that month.
For the professors, however, the bigger question extends beyond the immediate tariff dispute.
Canada must decide how much it wants to continue relying on the United States while also determining what kind of economic relationships it wants with Europe, Asia and other global markets.
As Canada responds to the latest round of U.S. tariffs, that balance may become one of the country's most consequential economic and political questions.
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