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Alberta’s exposure to tariffs, part 3

Alberta’s exposure to tariffs, part 3

Posted on: 6/15/2018 | Author: ATB Financial's Economics + Research Team

​​The Owl is taking a deeper look into Alberta's trade relationship with the US. We asked ATB's team that researches and writes Perch​ to help. The following is the final edition of a three-part series, a petite version of Perch​.

Alberta’s number one export to the United States is oil and natural gas, accounting for a whopping 79.3 per cent of Alberta’s total exports to the US last year. The proportion for Canada as a whole is 23.2 per cent followed – in second place – by motor vehicles and parts at 18.2 per cent.

So far, oil and natural gas have not been high on the US Administration’s list of trade irritants with Canada or other countries. Softwood lumber, steel, aluminium, dairy and, most recently, automobiles have either been subjected to US tariffs or mentioned by President Trump.

Fortunately, oil and natural gas have not been in the President’s crosshairs. But, even though the US benefits greatly from its energy trade with Canada, there is nothing to say that our main export will not suddenly be added to the list of things the President thinks should be subject to trade barriers. The North American Free Trade Agreement includes a chapter on energy and petrochemicals that could, depending on how wrangling over the agreement evolves, put Alberta’s critically important sales of oil and gas to the US in the hot seat.

Even if Alberta is not as directly exposed to US protectionism at the moment as, for example, Ontario and Quebec are in the wake of the tariffs on steel and aluminum, if their economies suffer, this will have negative consequences for Alberta in terms of our trade with those provinces and the overall strength of the Canadian economy. Steel, moreover, is used extensively in the oil and gas industry, so we are not immune to that tariff despite the relatively small amount of steel Alberta exports ($0.2 billion) compared to Ontario ($6.1 billion).

Alberta exports, 2017, graph​​

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