For those enterprises that may not be able to qualify for exemptions, a significant strategy to counteract these tariffs involves leveraging free trade zones (FTZs). Canada’s current FTZ points (FTZPs) are rather limited in scope, focusing more on logistics than on fostering comprehensive trade and manufacturing incentives.

Alberta could learn from successful models like those in the U.S. or Iquique, Chile, where FTZs offer duty deferrals, tax benefits, and streamlined customs processes. Establishing or expanding FTZs in Canada could serve as a buffer against tariffs, providing SMEs with the tools to remain competitive whilst fostering growth and prosperity. Moreover, Canadian businesses have the option to set up in U.S. FTZs, which could be particularly beneficial for those already engaging with American markets.

However, beyond these structural adjustments, there’s a compelling need for direct engagement with U.S. stakeholders. Alberta businesses should not just depend on government negotiations but should also cultivate relationships with our trading partners, U.S. trade associations, industry groups, and business coalitions.

By doing so, we can effectively communicate the adverse impacts of these tariffs not just on Canadian enterprises but also on American companies that rely on Canadian goods. Highlighting mutual benefits and shared economic interests could foster a more collaborative approach to trade policy adjustments and reinforce our natural sense of Team North America.

Team North America needs to recognize that issues like border security and the fentanyl crisis are not just about where these problems originate. They demand a joint effort to ensure that these substances cannot move freely across borders. This necessitates aligning policy priorities between Canada and the U.S., focusing on reducing the supply at source, enhancing border controls, and sharing intelligence.

That all being said, there is a palpable sense of frustration and anger among Canadians and Albertans: We feel betrayed by our southern neighbours. This sentiment is not just about economics; it is about the perceived breakdown of friendship and trust. The solution might lie in fostering more open dialogues
and discussions at the state level, where personal and professional relationships can influence policy more directly. By engaging with state officials, local businesses, and communities in the U.S., there is potential to build understanding and create alliances that could advocate against such tariffs, and work co-operatively on border issues, emphasizing the interconnectedness of our economies and societies.

On a domestic level, this situation underscores the urgency of eliminating interprovincial trade barriers within Canada. Such barriers have long been criticized for stifling economic growth by preventing goods from flowing freely across provinces. Creating a more unified domestic market would not only strengthen Alberta’s position but also enhance Canada’s overall economic resilience against external trade shocks.

The 25-per-cent U.S. tariffs, if implemented, present a challenge for Alberta’s SMEs, but we are resilient. By focusing on export exemptions, advocating for more robust FTZ policies, engaging directly with U.S. business communities, and pushing for internal trade liberalization, Alberta’s and Canada’s SMEs can emerge from this challenge in a stronger position. The key is proactive adaptation and leveraging international, bilateral, and national trade tools to turn protectionist policies into opportunities for innovation and growth.

As we move forward, it is clear that this situation is not merely about surviving tariffs but about redefining how Alberta, and indeed Canada, engages in trade in a world where protectionism is on the rise.

Link to the article in the Edmonton Journal HERE

Catherine Brownlee is president of Alberta Enterprise Group. AEG members employ over 150,000 Albertans and generate billions in economic activity each year.