Thunder Bay will feel an impact from the 25-per cent U.S. tariffs and Canadian counter-tariffs that came into play Tuesday, but the blow will be more muted relative to other cities in Ontario, business and economic experts say.
“Nobody in Canada wanted this trade war and nobody wanted these tariffs to come into place,” said Charla Robinson, president of the Thunder Bay Chamber of Commerce.
“This is going to be impactful. As costs go up, the spending goes down, meaning there is the potential for economic slowdown on both sides of the border.”
Livio Di Matteo, professor of economics at Lakehead University, said about seven per cent of Thunder Bay’s GDP (gross domestic product) is directly tied to exports to the United States and those exports are primarily resource products in the forest sector.
“In a worst-case scenario, one might see the loss of 1,200 to 1,600 jobs in Thunder Bay,” Di Matteo said. “That however, is a worst-case scenario.”
With exports to the U.S. accounting for about seven per cent of its GDP, Di Matteo says Thunder Bay is not as dependent on exports to the U.S. as Ontario as a whole. About 50 per cent of Ontario’s GDP is tied to exports, and of those, 85 per cent goes to the United States.
This week, the Canadian Chamber of Commerce released the tariff exposure index, ranking Canadian cities’ vulnerability to U.S. tariffs based on data from Statistics Canada. Thunder Bay ranks 13th with 11.2 per cent vulnerability of 41 cities across Canada, with St. John, New Brunswick being the most vulnerable at 131.1 per cent.
Robinson pointed out that you can’t compare Thunder Bay to Windsor or Calgary.
“Windsor’s whole economy is built on the auto sector and they are going to feel this immediately — within days — and are already saying that they potentially will be shutting down some of the production lines because they are so dependent on products coming back and forth between the U.S. and Canada,” she said. “Similarly, Calgary with oil and gas, or Saint John with oil and gas energy. Their whole economies are built on one thing, which makes them very highly dependent. Thunder Bay doesn’t have that.”
With forestry a big part of Thunder Bay’s economy, Robinson says the sector will feel the repercussions of the tariffs. Besides, softwood lumber already carries “anti-dumping” tariffs.
“So it’s just another layering of (tariff) impacts from that perspective, which makes it much more worrisome,” she said.
Di Matteo added that Thunder Bay’s economy is insulated by a large broader public sector, which accounts for about 35 per cent of employment, as well as currently large public sector contracts in both construction — such as the correctional facility — and manufacturing involving Go Transit rail cars. He said this will further insulate the city.
“There are expectations that there will be pullback by city residents in cross-border visits to the United States and a redirection of their spending to goods and services within Thunder Bay which should provide further stabilization to the economy,” he said.
Meanwhile, Robinson warns that businesses need to be preparing because these tariffs could lead to an economic slowdown.
“This could lead to fewer consumer purchases, so they should be planning accordingly around how much stock they are bringing in, and how much money they are putting out to buy (stock),” Robinson said.
“Businesses need to be looking at some of those pieces, specifically what they’re selling, but also their cash flow and how they can protect that should there be a reduction in their sales as a result of economic slowdown.”
On Tuesday, LCBO stores had emptied shelves of U.S. spirits and California wine and replaced them with notes stating support for the “better of Ontario and Canada.”
