B.C. Premier David Eby is promising to seek new export opportunities for the province after U.S. president-elect Donald Trump threatened to impose a 25-per-cent tariff on all Mexican and Canadian goods.
British Columbia exports billions of dollars’ worth of commodities and products – coal and lumber, plastics and machinery – every month, with just over half bound for the United States.
It could be worse. Canada as a whole sends three-quarters of its exports to the U.S. B.C. has less exposure to that single market thanks to a long-running policy, embraced by political parties of every stripe, of maintaining a diversified trade portfolio.
“We’re going to continue to do our work to expand those trading opportunities,” Mr. Eby told reporters Wednesday.
In the 1980s, B.C.’s political leaders set their economic sights on Asia, opening trade offices in Hong Kong, South Korea and Japan with the intent of reducing the province’s dependence on its dominant customer to the south. The province has bankrolled countless trade missions and now maintains 19 overseas trade offices.
Yet the U.S. has consistently remained its most important trading partner over the past four decades.
At best, the diversification strategy has dampened the siren call of the behemoth at its doorstep.
“Canada is so privileged to be next door to this giant economic engine of the United States,” noted former B.C. premier Glen Clark in an interview. “We understand the laws there, we understand the language, we understand the people, and it’s very close, so it’s a natural.”
But too much dependence on a single market – no matter how big, no matter how easy – comes with risk.
Mr. Trump’s tariff threat should be a catalyst for a fresh commitment to cultivate new markets, said Mr. Clark, who led 13 trade missions to China alone during his term as premier, from 1996 to 1999. “Reviving that trade policy, only with different focus on parts of the world, makes a lot of sense as we move forward in this kind of dangerous time.”
In 1987, Mike Harcourt, then the NDP opposition leader, stood up in the legislature and endorsed the Social Credit government’s early trade missions. Even as some Socred backbenchers dismissed the trips as “boondoggles,” Mr. Harcourt pressed for a more aggressive strategy. “We support those initiatives, but we’re not bold enough,” he said, insisting that the province needed to establish outposts in China and India.
At the time, the Canada-U.S. softwood lumber dispute was demonstrating the ability of the U.S. to cripple the province’s forest sector. That conflict continues today – a textbook example for Canada of how U.S. protectionism can supersede good trade relations.
British Columbia’s position as a trade gateway for Pacific Rim countries was already a reality before politicians tried to help. The year Mr. Harcourt was calling for trade offices in China, just 46 per cent of the province’s exports went to the United States.
When he became Premier in 1991, Mr. Harcourt took the opportunity to pursue new markets aggressively. “I started talking about Vancouver being, not the last stop of the CPR railway, but the front door to Asia for Canada,” he said in an interview.
But today he believes the province’s trade strategy needs an urgent update to prepare for 2025, when Mr. Trump returns to office.
B.C.’s Trade Diversification Strategy was updated in 2023, but much has changed since. The value of softwood lumber exports has stagnated and is now rivalled by sales of machinery and equipment. Meanwhile, energy exports – especially coal – are climbing in value.
Mr. Trump’s tariff threats aside, global trade relations are also more complex, particularly with China and India. The two countries are host to almost half of B.C.’s international trade offices outside the U.S.
David Emerson helped steer Canada toward trade diversification. As deputy finance minister under then-Premier Bill Bennett and deputy minister to Premier Bill Vander Zalm, he crafted B.C.’s Asian Pacific trade strategy and later introduced the Asia-Pacific Gateway and Corridor Initiative as the federal Minister of International Trade.
He also was the minister who negotiated the one and only settlement on softwood lumber, in 2006. That agreement expired in 2015.
Mr. Emerson says this is not a good time for British Columbia – and Canada – to face a strong protectionist leader in the U.S., because the alternatives are limited. “I do believe we need to grow market penetration in markets other than the U.S., but the greatest potential is in markets where we now have terrible relations,” he said. “Today, relations with China and India are a mess, and the great trade diversification strategy has run into serious trouble.”
China is B.C.’s second-largest export destination – one that is growing in value. But Canada and China are in the midst of a trade spat. In August, Ottawa announced a 100-per-cent import tariff on Chinese electric vehicles and a 25-per-cent tariff on steel and aluminum products from China, after the U.S. and the European Union introduced similar measures. The following month, Beijing launched an anti-dumping investigation into imports of rapeseed from Canada. Meanwhile, Mr. Trump has signalled he is prepared to reignite trade tensions between the U.S. and China, which could put other trading partners in the crossfire.
Canada’s relations with India soured after Prime Minister Justin Trudeau said last year that there were credible allegations the Indian government had links to the assassination of Sikh activist Hardeep Singh Nijjar in Canada. Canada has since alleged that India’s Home Affairs Minister, Amit Shah, ordered the targeting of Sikh activists in Canada. Both countries have now expelled each other’s top diplomatic officials.
Mr. Trump’s rationale for slapping tariffs on Canadian and Mexican imports is to punish both countries for lax border security, allowing illegal migrants and illicit drugs to slip through into the U.S.
On Wednesday, Mr. Trudeau met with the premiers to strategize and emerged with a promise to strengthen border security by pumping more money into the Canada Border Services Agency and the RCMP.
Mr. Eby, who advocated for that investment as an answer to Mr. Trump’s complaints, said Canada should put up a united front to take on the U.S. trade threat. But in the meantime, he said, he’ll renew his government’s commitment to diversification. “This was definitely the right direction, obviously, in hindsight, and we do have to redouble those efforts, given the instability south of the border.”
The decades of previous efforts have shown, however, that changing those trade patterns will be exceptionally difficult.
