‘The Trump potential presidency is the greatest threat to the Canada-U.S. relationship,’ said Bruce Heyman, former U.S. ambassador to Canada
The upcoming U.S. election has Alberta business leaders and economists anxious about the effect on the provincial economy over the next 12 months.
A second Donald Trump presidency could throw provincial economic forecasts into tumult, as a result of sweeping tariffs and a heavy-handed immigration agenda, all of which would have effects north of the border, Calgary Economic Development (CED) said Tuesday at its annual conference assessing Calgary’s economic outlook.
It’s a striking change of tone from last year’s outlook, which predicted a favourable economy, with Calgary expected to post the highest GDP growth of the cities CED studied.
“The Trump potential presidency is the greatest threat to the Canada-U.S. relationship,” Bruce Heyman, the former U.S. ambassador to Canada during the Obama administration between 2014 and 2017, told media Tuesday afternoon.
“Without being hyperbolic — I’m just being straightforward with everyone — with all of (Trump’s) policy proposals that he’s laid out, almost every one of them will impact Canada, and almost every one will impact Canada quite negatively.”
With one quarter remaining, ATB is forecasting Alberta’s real GDP growth will be 2.5 per cent this year and 2.8 per cent in 2025, both well exceeding national economic projections by more than a percentage point.
Trump has promised to impose a 10 per cent tariff on everything the U.S. imports. Mark Parsons, ATB chief economist, said he would closely watch whether that tariff applies to Canadian energy exports to the U.S.
“I see that as very counterproductive, to apply a tariff on Canadian energy, which is a vast majority of Alberta’s exports,” Parsons said.
‘Effectively, the USMCA will be over’: former ambassador
The United States-Mexico-Canada Agreement (USMCA) — the three countries’ free-trade agreement — will also be up for renewal in 2026. Though ATB predicts the agreement will be reupped in more than a year’s time, Heyman said he disagrees with the notion that the agreement would carry any significance should tariffs be imposed on Canadian exports.
“Effectively, the USMCA will be over. It is a free-trade agreement. There is no free-trade agreement if you tariff everything, and so that agreement will be gone,” he said.
Trump also hasn’t deviated from his tariff messaging, signalling that the tariff would apply to Alberta’s oil and gas exports.
Major capital projects proceeding
Even amid all that uncertainty, Alberta’s economy is poised for a relatively strong year, though lingering effects of inflation will continue to stress consumers, ATB said in its annual economic outlook report. Though Alberta’s year-over-year inflation rate has hit its target two per cent, the overall price increases that occurred starting in 2021 mean prices are still elevated compared to three years ago.
ATB also projects the price of West Texas Intermediate (WTI) will average about $74 a barrel in 2025, two dollars less than it projects for 2024.
“This is an economy that relies a lot on major projects — multibillion-dollar projects — so businesses need that certainty to make those investments,” Parsons said. Labour force concerns and supply chain issues have largely settled, he said, leaving the U.S. election as the major looming factor affecting further investment in similar major projects.
“I think Alberta is actually well positioned to invest more. There’s capital on the sidelines, waiting for a place, and we could see even faster growth than we’re forecasting, as well,” he said.
More to come…