Tariff threat casts shadow over upcoming Alberta budget
Alberta Finance Minister Nate Horner is introducing a provincial budget Thursday amid concerns and uncertainty about the economic impact of U.S. President Donald Trump’s threat to impose tariffs on Canadian exports to the United States.
Trump has threatened that all imports from Canada would face a 25 per cent tariff, except for oil and gas, which would have a tariff of 10 per cent.
People in Alberta’s agricultural and forestry sectors, which rely heavily on exports to the United States, are bracing for the impact.
Horner told reporters at the Alberta legislature on Wednesday that while his officials didn’t have to scrap the entire budget due to the tariff threat they decided to redo the revenue assumptions in the third week of January.
He said the document will have multiple scenarios but assumes some level of tariff.
“There’s so many things that are out of our control,” he said. “So, I think it’s just showing Albertans that we’re gonna leave some dry powder, hopefully, for government to be flexible and respond and also have a plausible scenario for what may come.”
Horner said affordability will be a theme of the budget given that it is a primary concern of many Albertans.
“We’re looking at what the government can withstand when it comes to our revenue, but we’re very cognizant of what that could mean for everyday Albertans and their businesses,” he said
Horner would not confirm reports that the government is moving ahead with the personal income tax cut promised by the UCP in the 2023 election. The measure would create a lower eight per cent tax bracket for the first $60,000 earned in a year.
Diversifying economy
NDP finance critic Court Ellingson is concerned a tax cut will be a bigger benefit for high-income earners. He worries child-care subsidies, benefits for people with disabilities and housing supports that help people with more modest incomes will be on the chopping block.
“We need to be thinking about delivering really strong public services and keeping this province stable and resilient in the face of tariffs,” Ellingson said.
He added the province needs to come up with ways to help Alberta industries diversify where they sell their products and services.
“How are we helping those companies explore new markets, expand their businesses to create jobs for Albertans?” he said. “That’s what we need to be thinking about.”
Charles St. Arnaud, chief economist at Alberta Central, said tariffs would have a significant impact on the Alberta economy because the province exports a third of its GDP to the United States.
“We might have lower tariffs on our major exports, especially energy, but most of our exports are directly geared toward the U.S.,” he said.
“In the end, Alberta will be one of the most hardest hit province in Canada if those tariffs are to be put in place.”
St. Arnaud said the province could see the loss of between 20,000 to 35,000 jobs over the next two years.
He said the price of oil always has an oversized impact on Alberta’s fiscal outlook due to its reliance on resource revenues and the lack of a provincial sales tax, and there’s a risk that prices may drop over the fiscal year.
“The global energy market is more toward excess supply than excess demand,” he said.
Alberta’s fiscal framework has rules for when a government is allowed to run a deficit. They include permitting a deficit when the province’s projected revenues drop by $1 billion.
Horner said the possible effect of tariffs “definitely fits” that scenario.
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