Commentary
By Hadrian Mertins-Kirkwood

Lost in the ruckus over Trump’s tariff threat are the fates of Canada’s small towns.

Canada’s top exports to the U.S. are natural resources, such as oil, potash and critical minerals, which are mainly produced outside our major urban areas. A 25 percent tariff on all Canadian exports to the U.S. will hit the whole country hard but hit rural communities the hardest.

Nowhere is more vulnerable than Fort McMurray, Alta. According to a recent study from Statistics Canada, nearly a quarter of jobs in the area depend on exports to the U.S. Dozens of smaller towns in the broader Athabasca and Wood Buffalo regions are in the same boat.

That’s because almost all of the oil produced in the Alberta oilsands ends up at American refineries. If the U.S. stops buying, Canada stops producing.

Oil towns aren’t alone. Many parts of the country depend on U.S. buyers for forestry products, including B.C.’s Cariboo region and the areas around Edmundston, New Brunswick, and Sherbrooke, Quebec.

The same goes for towns that produce metals, minerals and agricultural products. For example, more than half the lobster produced on Nova Scotia’s South Shore gets shipped south of the border. A sixth of workers in the region depend on U.S. trade for their livelihoods.

Canada has a long and ugly history of resource busts. A Trump bust will be worse.

First: Trump’s tariffs will hit more than just resources. Manufacturing towns, such as Sarnia, Ontario, and Drummondville, Quebec, are in the crosshairs, too.

Second: Trump’s tariffs will hit every industry and every region at the same time, making it that much harder for governments, communities and workers to respond. There will be few opportunities to retrain or relocate workers if every sector and region is hurting.

Third: Trump’s tariffs are likely to increase corporate consolidation and foreign takeovers as bigger firms – including American investors bolstered by a weakened Canadian dollar – buy up struggling Canadian companies.

Fourth: Trump’s tariffs – which are driven by ideology and politics, not sound economics – could stick around for a long time. There is simply no guarantee that the U.S. will return to being a reliable trading partner, even if Canadian governments bend a knee to Trump’s demands.

In a worst-case scenario, the Canadian industries battered by Trump’s bully tactics may never bounce back. The oil industry, in particular, is living on borrowed time as the global economy electrifies. The sector is already in long-term decline and a Trump bust is a blow it may never recover from.

Altogether, these factors spell disaster for rural communities across the country.

So what can be done about it?

In the short term, we need emergency support for the workers, communities and small businesses hit hardest by Trump’s trade measures. Income top-ups similar to the ones introduced during the COVID-19 pandemic could keep businesses operating and workers working for the time being.

More accessible and generous Employment Insurance benefits can help mitigate the damage of inevitable layoffs.

In the long term, Canadian governments and communities need to reevaluate their dependence on resource exports to the U.S.

We desperately need to extract more value from the resources produced in Canada. We also need to find other buyers.

Major investments in domestic processing and manufacturing capacity could allow Canada to produce more value-added goods, such as batteries and vehicles, for global markets. It would also give rural communities stable local buyers for their resources.

But more than anything else, we need to make plans for a different future. The Trump bust may be cruel and unnecessary, but it is a clear sign that our current economic strategy of U.S. integration is untenable.

Every Canadian small town staring down the barrel of the Trump presidency needs an industrial policy plan. Their futures – and Canada’s future – depend on it.

Hadrian Mertins-Kirkwood is a senior researcher with the Canadian Centre for Policy Alternatives