B.C.’s gross domestic product could expect to shrink 1.2 per cent in the second quarter of this year, if U.S. President Donald Trump imposes broad tariffs on Canadian imports, the Conference Board of Canada says in an updated forecast.
Provinces that are more exposed to U.S. trade, like Alberta, Ontario and Saskatchewan, would be harder hit, with declines of 1.4 per cent to GDP forecasted.
Canada overall would see its GDP shrink by 1.3 per cent in the second quarter and inflation would increase 0.7 per cent.
The Conference Board’s economic modelling is based on several assumptions, including that tariffs of 10 per cent on energy exports and 25 per cent on all other exports are in place for at least three months and are not increased, that Canada retaliates with tariffs on American imports, and that there is no response from the Bank of Canada in terms of interest rate adjustments or other monetary policies.
As Premier David Eby has pointed out a number of times in recent weeks, B.C. is somewhat more insulated from American tariffs than some other provinces, because its export markets are more diversified. The Conference Board notes that the U.S. accounted for only 51 per cent of B.C.'s exports in 2024.
“British Columbia would be expected to experience relatively modest impacts from tariffs, given its diversified set of trade partners, with less reliance on the U.S. and more reliance on Asia, as well the relative importance of services in its economy,” the Conference Board says in its report.
“Only 51 per cent of B.C. goods exports went south of the border in 2024, among the lowest of all provinces, which would help the province insulate itself from the worst of tariffs.”
Even so, certain sectors like lumber and aluminum are highly exposed to the U.S. market. B.C. could expect to see a GDP decline of 1.2 per cent in the second quarter, as a result of the tariffs and counter-tariffs, the Conference Board forecasts.
“Major contributors to the decline would be weaker engineering construction related to resource projects, and the spillover effects to the province’s finance and professional services sector.”
Despite the assumption that energy exports would face lower tariffs than other goods, oil-producing provinces like Alberta and Newfoundland would be among the hardest hit provinces, due to energy export exposure to the U.S.
The U.S. accounts for 90 per cent of Alberta’s exports, mostly oil and natural gas. Alberta’s cattle sector is also highly exposed to the U.S.
“While oil output, given its size, would drive some of the provincial weakness even if the industry itself faces minor impacts, other exports, especially related to the cattle industry, would be challenged by tariffs given cross-border integration for processing,” the Conference Board says.
As for Newfoundland and Labrador, the Conference Board predicts a “relatively minor direct impact in the province’s oil sector,” but notes that supporting industries, such as mining support services, would be affected as a result of curtailed investments in energy.
Ontario would also be hard hit, despite having a more diversified economy. Services account for 78 per cent of Ontario’s economy, which would not be directly affected by tariffs. But it’s manufacturing sector would be hit hard, especially the automotive sector.
“In short, a relatively small part of Ontario’s economy would be impacted, but the impacts in the affected sectors would be large," the Conference Board says. "For example, we expect that auto exports would fall significantly.”
An earlier Conference Board analysis also forecasts some significant impacts on the American economy.
“We also expect that given the intricate cross-border supply chains in the North American auto manufacturing industry the tariffs would lead to shutdowns in some U.S. auto production,” the Conference Board predicts.
“The tariffs would make production with existing supply chains uneconomic, and it would take considerable time to shift them to domestic sources.”
“The direct and secondary effects of these shutdowns would be considerable, and the end result is that the U.S. economy would be worse off. We estimate that GDP growth on an annualized basis in the U.S. would be 1.4 per cent lower in the second quarter of 2025, and inflation will increase by 0.2 percentage points in the same quarter.”
