Alberta’s 2025 Budget is planning for the impacts of U.S. tariffs to be far-reaching and to slow overall economic growth. But the economic outlook incorporated in the budget assumes tariffs on goods will be 15 per cent in the year ahead rather than the 25 per cent tariff threatened by U.S. President Donald Trump.
Alberta Finance Minister Nate Horner said the budget did include scenarios where the full 25 per cent tariff was imposed, but with ongoing uncertainty around implementation, “we didn't think it was reasonable to create the budget around that.”
At a press conference on Thursday, Horner assured reporters he had no insider information, saying the 15 per cent figure is based on estimates from public information and the conclusions of his department’s economists.
At 25 per cent, Horner suggested the negative economic impacts would be too much to bear on either side of the border.
“I don't want to comment on what the U.S. economy could sustain, but we think 15 per cent is a sustainable rate that that could be left in,” Horner said.
“It could be 25 per cent for a few months and come back to zero. This has to be an average of the entire fiscal year. So, we think this is a prudent place to budget from.”
Horner said there seems to be more certainty around the 10 per cent tariff being floated for energy products, which the province relied on in the upcoming budget.
The budget forecasts a “moderate trade conflict” trade conflict will bring slow Alberta’s real gross domestic product (GDP) growth to 1.8 per cent in 2025 and 1.7 per cent in 2026.
As recently as Thursday, Trump said the full 25 per cent tariffs on most Canadian goods will take effect on March 4. In that scenario, Alberta anticipates real GDP growth would decelerate to 0.5 per cent in 2025, and 0.6 per cent in 2026.
In either scenario, the province expects the manufacturing and agriculture sectors to be hit hard by U.S. tariffs.
The Budget 2025 Fiscal Plan notes three-quarters of Alberta’s manufactured goods went to the U.S. in 2024.
“Unlike energy products, manufacturing goods tend to be more responsive to higher prices because of the ready availability of domestic substitutes in the U.S. As a result, real manufacturing exports are forecast to decline this year,” the fiscal plan says.
Because of the greater variety of export markets available for agricultural products, commodities like wheat may be cushioned from the full impact of tariffs, while the cattle industry “may see sharper price declines due to limited short-term supply adjustments and a lack of alternative markets.”
