Trump's trade tariffs would send Manitoba into a recession: Premier Wab Kinew

The damage to Manitoba from a 25 per cent tariff on Canadian goods entering the U.S. cannot be overstated, Premier Wab Kinew says.

"The bottom line is it would mean a recession for our province, and we can't have that happen," he told reporters on Tuesday, following an address at the Association of Manitoba Municipalities fall convention in Winnipeg, where he told delegates every province is united in working to fight U.S. president-elect Donald Trump's threatened sanctions.

However, the federal government needs to step up with money to make it happen and address some of Trump's concerns, Kinew said.

"We have to show the Americans that we're serious about border security."

Trump announced Monday evening that he'll slap a sweeping 25 per cent tariff on all products entering the U.S. from Canada and Mexico unless those countries rein in what he says is a flow of drugs and migrants across their shared borders with the U.S. 

The economic sanctions would begin Jan. 20, 2025, the day of Trump's inauguration.

"That is a huge impact, so that's something that we can't allow," Kinew said.

The U.S. is Canada's largest trading partner, with nearly 77 per cent of Canadian exports going there.

For Manitoba, it's about 73 per cent, which equates to about $15 billion annually, according to Chuck Davidson, president and CEO of the Manitoba Chambers of Commerce.

"We were concerned when the discussion [about a potential tariff] was about 10 per cent," which the Canadian Chamber of Commerce found would cost the Canadian economy $30 billion annually, he told CBC Manitoba Information Radio host Marcy Markusa on Tuesday.

"This is going to have a significant impact on the Canadian economy if this goes forward. We need to make sure this is the number 1 concern of both our provincial and federal governments, to do whatever possible to lessen the impact of this."

Some companies have profit margins that are under 25 per cent, so that kind of hit would undoubtedly lead to some closing up shop, said Terry Shaw, the Prairies vice-president for the Canadian Manufacturers and Exporters, Canada's largest trade and industry association.

"It'll impact retail sales, restaurants, the arts and [be felt] throughout the economy," he said, adding manufacturing will be among the industries that particularly feel it.

"One out of every $10 generated in the Manitoba economy is generated courtesy of a manufacturer."

Take steps to avoid sanctions: Kinew

Kinew said Canada needs to do the things being asked of it, if it wants to avoid those scenarios.

"We've gotta have strong border security and we have to bring the hammer down on drug trafficking," he said, adding in order to make that happen the federal government must address the RCMP staff shortage.

According to Kinew, the RCMP have said they have the necessary applicants, but need expedited processing to get them into training and then deployed into communities.

Once that's addressed, "we're more than happy to play our part," Kinew said.

"We're going to be able to have the resources to have drones intercept drug trafficking, we're gonna have the resources to keep a better eye on the [border] ports. We're gonna have the resources … in terms of holding people accountable in local communities right across Manitoba."

There might not be enough time to implement the changes before Trump takes office, but a clear and strong message can be sent to him that the changes will be made, Kinew said.

"What's the downside? Manitobans want something done about drugs, so if we can tackle a major public safety issue that also helps the trade conversation with the U.S., I think it seems like a necessary step forward."

Wayne Ewasko, the interim leader of Manitoba's Progressive Conservative party, called the potential tariffs against Canadian goods "a very serious situation."

He says the NDP government is constantly pointing the finger at Ottawa and needs to develop a Manitoba strategy in the face of the possible tariffs. 

"There doesn't seem to be a plan to worry about Manitoba's economic interests at our various different profitable sectors," Ewasko said.

However, he isn't saying what he thinks Manitoba's trade strategy should look like.

Canada must also meet the NATO target of spending two per cent of GDP on defence, almost doubling annual defence spending to $81.9 billion, in order to appease the U.S., the premier said.

"If Canada is not upholding our obligation, in terms of what we invest in the Canadian Armed Forces, the Trump administration is going to use that as something to hit us over the head with in the trade conversation."

Davidson says Manitoba needs to get its close U.S. trading partners on side by stressing the impact tariffs will have on them.

"It's going to be critical minerals, it's going to be manufacturing, it's going to be egg products, it's going to be energy," he said. "All of those are companies … doing cross-border [business] on a daily basis, so that's where some of the pressure and some of the negotiations need to take place — with the individual states. They need to understand."

Davidson specifically cited Minnesota, Ohio, Georgia and Tennessee. The latter is one of the biggest trading partners with Manitoba in regards to pharmaceutical products going into that state, he said.

"It's a no-win situation for either country."

Shaw from the Canadian Manufacturers and Exporters echoed that remark.

"While this will clearly be damaging for Canadian and Manitoba manufacturers, it'll be just as damaging for U.S. consumers and U.S. manufacturers. The U.S. purchases over $400 billion in goods every year from Canada, and they purchase these not only as finished goods, but as manufacturing input," he said.

"President-elect Trump himself said he wants U.S. manufacturing to grow and thrive. Adding a 25 per cent premium on their manufacturing inputs in the United States will have the exact opposite [effect].… This is not good for anybody."

He suspects Trump and his colleagues are aware of that, and perhaps his threats are just bluster.

"But until we hear a change in the messaging, we have to act like this to become a reality, so we have to keep speaking out against it," Shaw said.