Upcoming tariffs on Canadian imports into the United States are anticipated to wreak havoc on some urban areas north of the border, while other cities can expect to feel less harm from the trade taxes set to take effect next month.
The Canadian city ranked most vulnerable to the tariffs is in Atlantic Canada. Saint John, New Brunswick, a city of approximately 80,000 residents located an 80-minute drive from the border to Maine, was deemed to have an exposure index of 131.1% in the study released by the Ottawa-based Canadian Chamber of Commerce.
Saint John was listed well above the second-ranked city, Calgary, which scored 81.6% in the report.
The study noted that over 80% of the 320 thousand barrels of crude oil refined at Saint John's Irving Oil Refinery are exported to the U.S., while many other seafood and forest products from the New Brunswick area are also exported to the U.S.
On Feb. 1, United States President Donald Trump issued an order to impose tariffs on Canadian goods, but they were postponed for at least 30 days. Last week, Trump ordered tariffs against steel imports from countries including Canada.
Moreover, the tariffs could have a devastating effect on Canada's industrial and office real estate markets, as 1.8 million Canadians, 8.8% of all working Canadians, work in industries considered heavily dependent on American imports of Canadian goods, according to recent Statistics Canada data.
Ontario Premier Doug Ford recently noted that 500,000 jobs could be lost due to U.S. tariffs in Canada's largest province alone, casting a dark cloud over the Ontario real estate market, valued at over $3 trillion at the end of 2023.
If the tariffs go into effect in early March as expected, the major impact expected on the cities' economies could ultimately shrink their real estate footprints if jobs are lost because of the trade taxes.
The report's rankings caught some attention in Saint John, where a local chamber of commerce official acknowledged the local economic dependence on the U.S.
"New Brunswick exported $15.5 billion to the USA in 2023 and the vast majority would have come from companies headquartered here in Saint John, the biggest being Irving Oil," said Fraser Wells, chair of the board for the Saint John Chamber of Commerce, in an interview. "When you think of the companies large and small here in Saint John, it wasn’t a huge surprise to us overall, but certainly the scale to which Saint John was number one was a little bit surprising."
Saint John has an office vacancy rate of 23.6%, well above the Canadian national average of roughly 17%, while it has a 1.4% industrial vacancy rate, according to Halifax-based real estate firm Turner Drake & Partners as of June 2024. Earlier this month Americold announced plans to build a warehouse near the port of Saint John.
The Canadian Chamber of Commerce compiled the list with help from chambers of commerce in cities with populations of over 100,000. Officials in those cities were not surprised by the results, though the CCC's Chief Economist, Stephen Tapp, confessed that he expected a different city to take the top spot before embarking on the work.
"I thought it would be Windsor, Ontario," Tapp said in an interview with CoStar News. "Some of these cities might not be aware of how many eggs they have in the USA basket compared to other cities."
He also said that some areas, such as Southern Ontario, might have a hard time adjusting their local economy to lessen their dependence on trade with the U.S.
Calgary also vulnerable
Meanwhile, other urban areas, such as cities in Alberta, might be able to adjust local trade if a new pipeline gets built, Tapp said.
"I am not sure that Windsor has a lot of options because they are so closely tied to the American market but there could be new ways to sell energy, do we need a west-east pipeline to service a European or Asian market? Those are the questions," Tapp said.
Calgary was listed as second-most vulnerable to the tariffs for similar reasons, as Alberta's biggest city depends on exports of crude oil and natural gas to the U.S., most notably to the state of Illinois.
Three cities in Southwestern Ontario, Kitchener-Cambridge-Waterloo, Brantford and Guelph placed three to six, as the area economies rely on exporting auto parts to the U.S.
Hamilton’s steel exports landed it in eighth place, while cities in Quebec seen as reliant on aluminum exports were also ranked as vulnerable to the imposition of tariffs, with the Saguenay-Lac-Saint-Jean region and the city of Trois-Rivières seen as most vulnerable. The report ranked Drummondville, Quebec, at the 12th position due to its wood and furniture exports to the U.S.
The urban areas that rely least on U.S. trade were Sudbury, which ranked last at 41, as its nickel exports are not uniquely focused on Canada’s southern neighbour, while West Coast cities like Nanaimo and Kamloops, British Columbia also ranked among the least vulnerable to sanctions due to the trade they conduct with Asian partners.
Canada’s largest cities were not ranked particularly high as being vulnerable to trade tariffs according to the Chamber of Commerce. Montreal ranked 23rd of the 41 cities, while Quebec City came in at 26th. Toronto was ranked No. 27 while Ottawa was 29th and Vancouver 32nd.