Will Americans pay more for Manitoba canola, meds and machinery?

Posted on November 27, 2024 by Peggy

If U.S. president-elect Donald Trump follows through on his threat to slap 25 per cent tariffs on all Canadian imports, the general consensus among economists and political leaders is that nothing short of chaos is coming.

Manitoba Premier Wab Kinew said Tuesday the tariffs would plunge the province’s economy into a recession. That may be an optimistic way to describe the simultaneous shocks created by runaway inflation, cratering consumer spending and massive losses by businesses of all sizes — which would be followed by mass layoffs if the private and public sectors can’t figure out a way to manage the maelstrom.

One school of thought is that Trump is merely playing a game of brinksmanship with the U.S.A.’s biggest trading partner and would not jeopardize his own economy by threatening ours. If you subscribe to this somewhat comforting scenario, the U.S. disrupter-in-chief is simply doing what he says he’s doing: trying to exact border and security demands from Canada.

The problem is, Donald Trump is not predictable. There’s no guarantee a collective Canadian effort to appease the president-elect or rally the most trade-dependent U.S. states and businesses to lobby Trump will succeed.

Justin Trudeau is also meeting with Canada’s premiers on Wednesday in an attempt to put together a united front, but the unpopular prime minister has little political capital left to spend.

In other words, Manitobans, like all Canadians, have no choice but to consider what will be impacted by the tariffs. In 2023, this province exported $15.5 billion worth of goods and services to the U.S.

‘Going to be very severe’: Bioscience Association

Our biggest export to the U.S., in dollar terms, may surprise Manitobans. It’s not canola, pork or farm machinery, but medications — both prescription and over the counter.

In 2023, Manitoba exported $2.3 billion worth of meds to the U.S., according to the Manitoba Bureau of Statistics. That included pharmaceuticals manufactured by major employers such as Bausch, in Steinbach, and Pfizer, in Brandon.

Andrea Ladouceur, president of the Bioscience Association of Manitoba, said she’s used to pharma flying “kind of under the radar” in a province better known for agricultural production and manufacturing machinery.

Medications, such as those manufactured by Pfizer in Brandon, were Manitoba’s biggest export to the U.S. in 2023. (Dado Ruvic/Reuters)

It’s uncertain what will happen to her sector when U.S. consumers have to pay far more for Manitoba-made meds, she said.

“That’s what everyone’s trying to grapple with,” Ladouceur said Tuesday in an interview. “We know it’s going to be very severe, but what does that mean?”

Ladouceur said some pharmaceutical manufacturers in Manitoba already have U.S. operations, which raises the spectre of companies shifting their production south of the border in order to remain solvent.

Manitoba’s second-largest export to the U.S. is no surprise: canola. In 2023, $1.3 billion worth of the oilseed and its oil was sent south of the border.

Tariffs would effect everything from hydro to hogs

The third-largest U.S.-bound export last year was electricity. Manitoba Hydro sold $702 million worth of power to the States in 2023 under deals brokered years before Trump was re-elected.

As a result, it’s unclear how tariffs could be applied to Hydro exports. Peter Chura, a spokesperson for the Crown corporation, said officials are just beginning to examine the implications of their sole product becoming too expensive for the export market.

Frozen potatoes and other veggies made up Manitoba’s fourth-largest export to the U.S., as $628 million worth of taters and processed produce went south.

The fifth-largest export to the U.S. may come as another surprise to Manitobans, especially those who see their province as a clean energy producer. Oil and gas, mostly frakked from this province’s wee corner of the Bakken formation, accounted for $610 million worth of sales to the U.S.

A man speaks at a podium. — Manitoba Premier Wab Kinew, speaking at the annual general meeting of the Association of Manitoba Municipalities in Winnipeg on Tuesday, warned the proposed tariffs would plunge the province’s economy into a recession. (Jeff Stapleton/CBC)

That’s just the top five export list from Manitoba in 2023. Slightly smaller exports to the U.S. included $543 million worth of agricultural equipment and $439 million worth of pork and live pigs.

Manitoba pork producers may face tariff-induced ruination, said Cam Dahl, general manager of Manitoba Pork.

“When you consider that we’re exporting 90 per cent of our product and all of a sudden we hear something like a 25 per cent tariff, that would essentially take that market away,” Dahl said in an interview Tuesday.

Other industries are in the same boat. And then there are industries that rely on their economic activity, in turn.

This is why Kinew’s recession prediction is not hyperbole. We could face something even more depressing, if Trump can’t be appeased, deterred or otherwise dissuaded.