Reports | January 21, 2025

Economic Analysis: How would the proposed 25% U.S. tariffs on Canadian imports impact the Saskatoon Region?

Overview

In 2023, Saskatchewan exported an impressive $27.1 billion worth of goods to the United States, representing a significant portion of the province’s economy. The Saskatoon Region, as Saskatchewan’s economic hub, plays a critical role in this trade, contributing 26.6% of the province’s total exports. However, this vital economic partnership now faces uncertainty as the U.S considers imposing a 25% tariff on all Canadian imports. The proposed measure could have far-reaching consequences for the Region, with the impact expected to vary widely across key commodities.

Impact on Saskatchewan’s Exports

The proposed tariffs are expected to reduce Saskatchewan’s exports to the U.S., as the higher costs of Canadian goods could dampen demand. Below is an overview of the projected impact across different commodities, with estimates categorized into low, medium, and high ranges.

Farm, Fishing, and Intermediate Food Products

Agriculture is Saskatchewan’s largest export sector, encompassing grains, meats, and processed foods. A 25% tariff would severely impact this sector, with losses estimated between $292 million to nearly $788 million, with the middle estimate projecting a $622 million reduction in exports.

Energy Products

Saskatchewan’s energy exports – oil, natural gas, and other resources – are critical to the Province’s economy. The proposed tariff could result in losses ranging from $30.6 million to nearly $1 billion, with a middle estimate of $670 million in lost revenue for the industry.

Metal Ores and Non-Metallic Minerals

Saskatchewan is a leading exporter of potash, uranium, and other minerals, making this sector highly vulnerable to the tariff. The higher costs could lead to a potential loss of exports ranging from $58.6 million to $435.6 million.

Potential Economic Impact on Saskatchewan by Commodity (x1,000)

CommodityLower ImpactMiddle ImpactUpper Impact
Total of all merchandise-$269,097.59-$1,622,839.09-$2,299,709.84
Farm, fishing and intermediate food products -$292,136.96 -$622,809.61-$788,145.93
Energy products-$30,570.13-$670,670.03-$990,719.98
Metal ores and non-metallic minerals-$58,571.76-$309,911.66-$435,581.61
Metal and non-metallic mineral products-$11,694.94-$36,276.84-$48,567.79
Basic and industrial chemical, plastic and rubber products-$1,872.11-$14,690.21-$21,099.26
Forestry products and building and packaging materials-$1,085.61-$22,736.46-$33,561.89
Industrial machinery, equipment and parts-$26,710.21-$73,527.16-$96,935.64
Electronic and electrical equipment and parts-$19.57-$5,164.32-$7,736.70
Motor vehicles and parts-$31,219.88-$40,465.03-$45,087.60
Aircraft and other transportation equipment and parts-$204.77 -$487.97-$629.57
Consumer goods-$437.38– $7,644.68-$11,248.33
Special transactions trade-$10,139.43-$14,020.33-$15,960.78

Source: Statistics Canada, SREDA

Impact on the Saskatoon Region

The Saskatoon Region plays a key role in Saskatchewan’s export economy, accounting for 26.6% of the province’s total exports. As a major economic hub, the Region would experience a direct, proportionate impact from the proposed tariffs in the range of $71.5 million (lower impact), $431.3 million (middle impact) and $611.2 million (upper impact).

To summarize, the proposed 25% tariff on Canadian imports presents a critical challenge for Saskatchewan’s export sector. With potential losses ranging from hundreds of millions to over $2 billion, the effects could be far-reaching, particularly in the agri-food, energy, and mining sectors. While industries like chemicals, machinery, and consumer goods may see more moderate declines, the real question remains: How will Saskatchewan navigate this storm? The province’s ability to secure alternative markets and implement effective mitigation strategies will be crucial. This is an economic threat that many will be watching closely as it unfolds, with wide-reaching implications for both the Province and the Saskatoon Region.


Methodology

To estimate the potential effects of a 25% tariff on all Saskatchewan exports, SREDA applied a standard economic approach that evaluates how sensitive trade volumes are to changes in trade costs. This analysis was then applied to estimate the impact on the Saskatoon Region based on its percentage share of Saskatchewan’s total exports.

Using data from Statistics Canada, SREDA analyzed the value of Saskatchewan’s exports across various product categories. The 25% tariff was modelled as a uniform increase in trade costs across all export categories. These adjustments allowed us to estimate the reduction in export revenues and the corresponding impact on each product category.

To address uncertainty created by the drastic nature of a 25% price increase, which is not typical in historical data, we conducted sensitivity analyses using medium and high elasticity scenarios. This approach provided a range of potential impacts, ensuring a more comprehensive assessment of the tariff’s effects.