Central Okanagan businesses leaders, experts discuss local impact of tariffs

Discussing impacts of tariffs

Photo: Nicholas Johansen

From left to right, Nick Arkle, Dr. Ross Hickey, Heather Weber, Grant Stevens, Barry Penner, John Lambiris, and moderator Chris Walker.

It wasn't all doom and gloom at the Kelowna Chamber of Commerce's panel on U.S. tariffs, held at UBC Okanagan Wednesday afternoon. But any optimism from the panelists was certainly limited.

Dozens of people filled the University Centre ballroom to hear from the panel, representing a handful of local industries that will no doubt feel the impact of U.S. President Donald Trump's 25% tariffs on most products imported into the U.S. from Canada. The tariffs went into effect Tuesday.

In response, Canada has imposed its own tariffs on some U.S. goods entering Canada, with further counter tariffs promised if the American tariffs continue.

The panelists had the following to say:

John Lambiris, Agriculture – “Cautious optimism”

John Lambiris is the Vice President of Sales and Procurement at The Star Group, an agricultural organization that represents local growers while also procuring produce from around the world for grocery retailers. Lambiris said his industry has been preparing for the U.S. tariffs for the past four weeks, ever since Trump first publicly brought up the idea. Lambiris said he's been blown away by the shift in consumer attitudes around buying local.

“Canadians have jumped on board full bore and it's been amazing to see,” Lambiris said. “We have essentially, collectively enacted a sort of trade embargo on United States growers and suppliers that is unlike anything we've ever seen in our industry. The support we've seen from Canadians and Canadian retailers is unprecedented.”

He said nearly every major grocery retailer reached out when the idea of the tariffs was first floated, looking for non-American sources of a wide range of produce.

“The best example I can think of is one major retailer said, 'We need you to find oranges that aren't from California,” Lambiris said. “We started contacting suppliers in Turkey and within three days we got a plan put together and by the end of the month we'll have Turkish oranges on the shelves in Western Canada.”

This example elicited a large round of applause from the audience.

Lambiris said he was hopeful the Buy Canadian trend will carry on, which could significantly benefit Okanagan fruit growers who've struggled with extreme weather disruptions over the past few years.

Barry Penner, Energy – “We are vulnerable”

Penner, a former B.C. MLA, is now the Chair of the Energy Futures Institute. He said B.C. is vulnerable to the U.S. when it comes to energy, as we're a net importer of electricity from the United States. In each of the past two years, he said B.C. has imported the equivalent of two Site C dams worth of electricity from the U.S., making up 20% of our electricity use.

He called Trump's tariffs “ill-conceived and foolish.”

“All I can think of is 'malice,' is the best term to describe what he's trying to do, not just to Canada but to other countries,” Penner said. “Because there's no real logical benefit to the United States in what he's doing.”

Penner criticized B.C.'s plans to further electrify its economy, arguing B.C. doesn't have the electricity supply to keep up with increased demand, even with the completion of the Site C dam.

“Let us continue to use natural gas, with more efficiency of course ... there are things we need to think about to make ourselves less dependent on the United States and improve our economic resiliency at the same time.”

Grant Stevens, Aviation - “Tremendous amount of uncertainty”

Stevens is the Chief Corporate Services Officer of KF Aero. He said aviation is a global industry, where many parts that are used in the American manufacturing of planes are made in Canada. As a result, the recently imposed tariffs could have widespread impacts on the industry and American manufacturers may start looking for parts from other sources.

He said he wasn't in favour of Canada's counter tariffs, noting these will have direct impacts on Canadian airlines, which will be passed along to the consumer.

Stevens said KF Aero is a largely service-based company, which are not impacted by the tariffs. At least for now.

“There is a tremendous amount of uncertainty,” he said. “When we get into times of uncertainty, consumers generally get scared and spending dries up. And companies suffer as a result. We're expecting big unemployment as a result of these things and those types of issues. But we don't know.”

He added he expects the tariffs to “hurt the manufacturing portion of the aviation industry in Canada significantly” if they're in place for an extended period of time.

Heather Weber, Tax implications - “Everybody is going to bear some of this cost”

Weber is an accountant with MNP who specializes in cross-border transactions. She said the uncertainty about how these tariffs will impact the business community in Canada reminds her of the the COVID-19 pandemic.

She said there could be big implications for ending free trade between the two countries.

“For most goods in North America there has been basically free trade, so now with these new measures that are put in place, it really is important in determining where the supply is taking place,” Weber said.

“The tariffs ... really are going to have an impact on everybody. They'll impact the Americans, they'll impact us, everybody is going to bear some of this cost. There's also an opportunity to talk with your key suppliers and key buyers of goods to see how you can share this burden so nobody has to have massive layoffs.”

She noted that there'll be opportunities to explore selling Canadian products within Canada, rather than looking across the border.

Dr. Ross Hickey, Historical perspective – “We've been down this road before”

Dr. Hickey is an associate professor of economics at UBC Okanagan. Bringing a historical perspective to the panel, Dr. Hickey outlined the history of free trade between the U.S. and Canada, dating back to 1855.

He noted one particular period in 1930 when the U.S. enacted tariffs that averaged 60% on Canadian goods entering the country, followed by counter tariffs, which were believed to exacerbate the Great Depression in both countries.

“We've had free trade, we've lost free trade, we've had free trade, we've lost free trade, we've had agreements, we've had parties not fulfil their obligations of those agreements, we've had renegotiations,” Dr. Hickey said.

He added that due to the uncertainty around the tariffs, the damage has already been done when it comes to attracting investment.

“That's what I think we're leaving out in this discussion about tariffs and retaliatory tariffs, the big issue is, are we making ourselves attractive for investment,” he said.

Nick Arkle, Forestry – “How do we share the burden?”

Arkle is the CEO of the Gorman Group, the forest products company based in West Kelowna. His company employs upwards of 1,000 people and he said thinks about them through this tumultuous time.

“This is real, this isn't just rhetoric coming out of the United States, it's hitting people hard,” Arkle said.

While the forestry industry has seen its fair share of ups and downs with the United States through the long-running softwood lumber dispute, Arkle said these new tariffs are different in that they showed up “almost overnight.”

He said the U.S. gets 23% of its lumber from Canada and about 55% of Gorman's products goes south of the border.

“We've got customers down there that we've supplied lumber to for 35, 40 years. You don't walk away from those kind of markets ... they're friends,” Arkle said. “We are working hard right now with them to try and figure out how to work this out, how do we share the burden?”

Counter Tariffs?

In response to a question about Canada's retaliatory tariffs, most of the panelists said they were not in favour of them, saying they will further exacerbate the issues for Canadian companies and pass along further costs to consumers.

Only Penner, who said he rarely supports the federal government's decisions, was supportive of the retaliatory tariffs put in place by Canada, that could expand if the American tariffs continue.

“The man in the White House is obviously a bully ... you'll get some hits if you stand up to a bully but you'll get more hits if you don't,” Penner said.