By Jayson Myers
The votes are in. Donald Trump has been elected the next President of Canada’s next-door neighbour and largest trading partner, the United States of America.
There was a lot of rhetoric during the presidential campaign. Trump pledged to slap 10 per cent tariffs on all imports into the US – or was it 20 per cent? – even more on imports from China. Such dire steps are unlikely to happen quickly, if at all. The President would need congressional approval, and there are some very important US business interests that would be bound to object. However, Canada and Mexico are entering into an era when trade tensions with the US will be ramping up. The Canada-US-Mexico Trade Agreement is up for review and renegotiation in 2026. We can expect some pretty tough bargaining from the new Trump administration.
Should we be concerned? Last year, Canada exported C$547.9 billion worth of goods to the United States. That represents 71 per cent of our total merchandise exports and just under 20 per cent of our Gross Domestic Product (GDP).
If the Trump administration imposes tariffs on all goods imported from Canada, we should be very concerned, but that’s not very likely to happen. A 10 per cent tariff on all imports would likely push prices up in the US by about two per cent. That’s not something that a new administration committed to taming inflation would likely want to do, but it’s not out of the question. The United States depends a lot less on imports than Canada.
Some of Canada’s export sectors may be more at risk than others. Energy and minerals account for 29 per cent of our exports to the United States. Unrefined oil and gas top the list of what we sell south of the border. Sales last year exceeded C$143 billion, almost a quarter of our total exports to the US. They help to power American homes, cars, and industry and should be less exposed to the threat of tariffs. Import tariffs would likely do little to reduce US energy demand in any case – they’d just make it more expensive for American industry and consumers.
Manufactured and processed materials and components—intermediate products—are more exposed; they represent 28 per cent of the goods Canada sells south of the border. We know that aluminum, steel, aerospace, and auto parts will be under the gun. Final goods producers in the food and consumer products and equipment sectors account for the remainder of our exports to the US and are probably at highest risk.
Canada’s top 10 exports accounted for half of what Canada earned from sales of goods to the US in 2023. Eight out of that top 10 list are manufactured goods – automotive equipment and parts (C$53 billion), refined petroleum products (C$23 billion), aluminum and aerospace products (C$13 billion each), vegetable oils and pharmaceuticals (C$10 billion each), steel (C$9 billion), and softwood lumber (C$8 billion).
No need to panic; there is a lot of room for negotiation with Washington. The integrated nature of our industrial supply chains means that it would be extremely damaging, difficult, and costly to break them apart. Canada may even emerge as a winner if the US focuses on penalizing goods originating in China or Chinese content in North American manufacturing. Nevertheless, it will take some very sharp negotiating skills on the part of our federal and provincial officials and business leaders to make the case that Canada is an integral partner when it comes to trade and industrial competitiveness. Luckily, the export profile of the Prairie provinces can help make the case.
Manitoba at higher risk
Manitoba exported C$15.5 billion in goods to the United States last year. That’s 71 per cent of the province’s exports and 17 per cent of its GDP.
The province’s top 10 exports to the US accounted for just less than a third of the total. However, except for electricity and oil and gas exports (C$702 million and C$610 million in 2023), the rest of the top 10 were finished goods like processed food products (C$2.8 billion), pharmaceuticals (C$2.4 billion), agricultural equipment (C$868 million), trucks (C$539 million), plastic products (C$474 million), and aerospace equipment (C$374 million).
Every province will need to get states on board to help them make their case, and Canada’s, to administration officials in Washington. Manitoba’s five most important trading partners are, in order of precedence, Tennessee, Minnesota, Illinois, North Dakota, and California.
Saskatchewan’s exports are resource rich
Saskatchewan exported C$27.1 billion in goods to the United States in 2023, representing 54 per cent of the province’s total exports and 25 per cent of its GDP.
Saskatchewan’s top 10 exports account for almost 89 per cent of what it sells south of the border. Natural resources like oil and gas (C$11.7 billion last year), mining ores (C$5.0 billion), wheat (C$537 million), and other grains (C$380 million) make up roughly two-thirds of Saskatchewan’s exports to the US. The rest of the top ten are manufactured or processed goods like vegetable oils (C$4.2 billion), refined petroleum products (C$692 million), agricultural equipment (C$660 million), flour (C$470 million), chemicals (C$442 million), and steel (C$388 million).
Prime targets for state support are Illinois, Minnesota, Montana, California, and Oklahoma.
Alberta’s exports are powered by petroleum
Alberta is even more trade-exposed than the other two Prairie provinces. In 2023, it exported C$156.1 billion worth of goods to the United States, representing 89 per cent of its total exports and 35 per cent of provincial GDP.
The predominance of Alberta’s petroleum sector doesn’t come as a surprise. Oil and gas topped Alberta’s list of exports to the US last year at C$121.2 billion, accounting for 78 per cent of all sales to the US and nearly 70 per cent of Alberta’s total worldwide exports. Oil and gas-based products accounted for a further eight per cent of exports to the US, including refined petroleum products (C$6.0 billion in 2023), rubber (C$3.8 billion), fertilizers (C$1.5 billion), and petrochemicals (C$1.4 billion).
Other top 10 exports from the province were animal carcasses (C$3.4 billion), vegetable oils (C$2.1 billion), lumber (C$1.0 billion), beef cattle (C$993 million), and wood products (C$854 million). Alberta’s top ten accounted for 91 per cent of all goods sold to the US.
Alberta’s targets for state allies aren’t too different than the other Prairie provinces. Illinois is by far the province’s largest customer, followed by Texas, Washington, Oklahoma, and Minnesota.
Where do we go from here?
The importance of a proactive, focused, and commonly aligned trade strategy for Canada when dealing with a new Trump administration can’t be overstated, and the Prairie provinces will have a major role to play in making the case that Canada is America’s most critical trading partner.
The stakes are high. The Prairies are more trade-exposed with the US than Canada as a whole.
All told, the Prairie provinces exported C$198.6 billion worth of goods to the United States in 2023, accounting for 81 per cent of all international exports from the Prairies and for just over 30 per cent of the region’s GDP.
However, 71 per cent of that total are energy products and a further three per cent are critical minerals – exports, in other words, that are rather important when it comes to keeping the US economy running. Those same products represent one-quarter of all the goods that Canada sells to the United States.
Canada’s argument in Washington—and in all state capitals—must be that we are a reliable partner in trade, a critical part of our countries’ integrated supply chains, and a backstop for US manufacturing. There can be no better case made to Americans than what they import from Canada’s Prairie provinces. Let’s hope they’re listening.
Jayson Myers is CEO of Next Generation Manufacturing Canada – the country’s Global Innovation Cluster for advanced manufacturing. An award-winning business economist and leading authority on technological change, Myers has counselled Canadian prime ministers and premiers, as well as senior corporate executives and policymakers around the world.