Navigating Uncertainty: How Alberta Can Thrive Amid U.S. Tariff Threats and Trade Shifts

Like many of you, my focus has been on Washington, D.C., today as President Trump was sworn in as the 47th President of the United States. Alberta’s Premier, Danielle Smith, is in Washington and has provided real-time insight into the proposed U.S tariffs within the past few hours. As Premier Smith notes, President Trump has decided to refrain from imposing tariffs on Canadian goods at this time as his administration study the issue further. ? ?

Despite the promising news today, the threat of U.S. tariffs is still very real. ? ?

As the CEO of Alberta’s provincial investment attraction agency, I have the privilege and responsibility of presenting Alberta as the prime destination for global investors to locate and expand. With its abundant natural resources, dynamic technology sector, and strategic location, Alberta offers unparalleled opportunities. However, even though the threat of the proposed U.S. tariffs has been avoided today, there is still uncertainty as to whether they could be implemented at a later stage. If they are implemented, they have the potential to reshape trade dynamics across North America, bringing both challenges and opportunities. ? ?

I am aligned with Premier Smith’s assertion that we should seek to avoid tariffs at all costs, however, as a forward-thinking investment agency we must be prepared to advise any potential investors. So let us explore three possible scenarios: the implementation of a full 25% tariff, partial tariffs, or no tariffs, and their implications for Alberta’s investment landscape.?

Scenario 1: Full 25% Tariff Implementation?

A full 25% tariff on U.S. imports would undoubtedly send shockwaves through the global economy. For Alberta, this scenario presents a mixed bag of challenges and opportunities. On the downside, heightened tariffs could disrupt supply chains and reduce export competitiveness for sectors heavily reliant on U.S. markets, such as agriculture and energy.?

Premier Smith foresees a future in which we need to negotiate ways to increase what Canadians and Americans buy from one another. For example, the United States could consider purchasing more oil, timber, and agricultural products from Canada, while Canada should consider purchasing more gas turbines, military equipment, and the computer hardware needed to build our growing A.I. data centre sector. For Premier Smith, finding ways to increase trade in both directions will be critical to achieving a win-win for both countries.

However, there is an alternative upside that lies in the opportunities to diversify trade relationships, not just by looking South but by looking East and West across Canada. Alberta’s strategic push toward global markets like Asia and Europe would undoubtedly also gain urgency. Investors could capitalize on Alberta’s commitment to trade diversification by leveraging the province’s access to international markets through agreements like CETA (Comprehensive Economic and Trade Agreement) and CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership). Furthermore, Alberta’s well-established infrastructure and proximity to the U.S. border could make it a hub for companies seeking to mitigate tariff impacts while maintaining North American operations.?

Scenario 2: Partial Tariff Implementation?

Partial tariffs, targeted at specific sectors, would create a more nuanced landscape. Alberta’s economy, rooted in resource wealth and emerging industries like renewable energy and technology, could find opportunities in areas untouched by tariffs. For instance, a focus on clean energy technologies, which align with global trends, might attract investors seeking to offset carbon-intensive tariffs.?

This scenario also underscores the importance of resilience and adaptability. Companies operating in Alberta could leverage government support programs, robust research facilities, and skilled labour to pivot toward tariff-exempt markets or goods. Investors would benefit from Alberta’s proactive stance, capitalizing on strategic partnerships and innovative supply chain solutions tailored to navigate a partially tariffed environment.?

Scenario 3: No Tariff Implementation?

This is where we stand today. The U.S. and Canada share a robust trading relationship that delivers significant mutual benefits. In 2024, Alberta alone exported $110 billion USD worth of goods, fueling American businesses, supporting millions of jobs along the supply chain, and bolstering U.S. energy security, food security, and A.I. data security.?

Without Canadian products, Americans would need to turn to what they see as less desirable trading partners, such as Venezuela and China. Venezuela is often associated with political instability, which could jeopardize future trade agreements. Moreover, China, widely regarded as America’s main global competitor, presents an unappealing alternative to the average American.?

In the absence of new tariffs, companies investing in Alberta should seek to maximise the current trading benefits we enjoy. Cross-border trade can continue unimpeded and Alberta’s position as a gateway to the U.S. market can continue to attract investors eager to leverage this advantage.?

Without the immediate pressure of tariffs, Alberta’s government and businesses could focus on strengthening existing trade relationships, enhancing infrastructure, and fostering innovation. Investors would find a welcoming and predictable environment, bolstered by Alberta’s low corporate tax rates and investor-friendly policies. Stability also allows for strategic, long-term planning, which is invaluable for industries ranging from energy to technology.?

Final Thoughts?

In his inaugural address, President Trump emphasized American inflation reduction and energy security as key objectives for his presidency - goals that heavily depend on a strong partnership with Canada. If the U.S. faces an energy crisis, it will inevitably look to its northern neighbour. The question for Americans is clear: Where would they prefer to source their energy - from Iran, Venezuela, or Canada??

In an increasingly uncertain and challenging world, the need for reliable allies has never been greater. Instead of drifting apart, we should be working to strengthen our partnership.?

While the threat of U.S. tariffs introduces a layer of uncertainty, Alberta’s resilience and adaptability shine through each scenario. Whether navigating the challenges of full tariffs, leveraging opportunities under partial tariffs, or thriving in a tariff-free environment, Alberta remains a formidable player on the global investment stage. Investors looking for stability, innovation, and growth potential should view Alberta as a prime destination, regardless of the external trade landscape.? ?

Companies can accelerate their advantage by choosing Alberta as their top investment destination.?

Invest Alberta clients all look for three core things when choosing where to invest – cost, ease, and speed?

On cost, we are one of the lowest-cost jurisdictions in North America for operating expenses. We have affordable real estate, low corporate taxes, and more employee retention than other jurisdictions. ? ?

On ease, we have stable political and legal systems, access to affordable energy, and a deregulated electricity system that works in investors’ favor.??

?On speed, we’re big on cutting government red tape. ?

At Invest Alberta, we are committed to helping investors navigate these scenarios, providing insights and strategies tailored to capitalize on Alberta’s strengths and competitive advantages. The world of trade may be shifting, but Alberta’s position as a hub of opportunity remains steadfast.?