Question: So, you were talking about the potential shape of things to come. Carry on!
Answer: In the last issue of the ATA News, I identified President Trump’s proposed trade policy as posing a serious threat to Canada and Alberta, with implications for public education in our province. In the weeks that have passed since I scribbled down those comments, things have actually gotten worse, with Trump explicitly identifying the United States’ (US) trade deficit with Canada as sufficient justification for the imposition of wide-ranging tariffs (effectively taxes) on imports from Canada.
The simplistic but attractive idea that a trade imbalance is inherently “unfair” and detracts from a nation’s wealth and power dates back to the 16th and 17th centuries. “Mercantilism,” as it was known, emphasized the importance of maintaining trade surpluses by limiting imports by means of tariffs and other trade barriers, hoarding gold and silver, and creating captive markets through colonial expansion. Mercantilism was largely abandoned beginning in the 19th century in favour of freer trade, but its impact on global economic and political structures resonates to this day.
If the new American administration introduces a neomercantilist policy program, including the imposition of sweeping tariffs on Canadian exports, the highly integrated North American economy will be entirely upended. Since the passage of the original free trade agreement between Canada and the United States in 1987, the two nations have been set on a path of increasing economic interdependency. This was heightened with the passage of the 1994 North American Free Trade Agreement, which brought Mexico into the fold, and effectively reaffirmed with the ratification in 2020 of the United States-Mexico-Canada Agreement. Over the last 38 years, these economies have effectively become one, with the United States, Canada and Mexico being each other’s largest trading partners.
[A downturn] might precipitate a long overdue, grown-up conversation about how Alberta is going to sustain critical services, including public education.
Alberta is particularly vulnerable to changing economic arrangements. As reported by Statistics Canada, of the $166 billion worth of goods sold by the province to international customers over the first 11 months of 2024, $147 billion (89 per cent) went to the US, the overwhelming majority of this export trade being oil and gas. While some in government are hoping that energy exports might be exempted from tariffs or be treated preferentially, there is substantial capacity for increasing domestic energy production in the US and no shortage of commercial interests wanting to do just that. Furthermore, because of its inherently high cost of production, Canadian oil is a marginal proposition even at the best of times.
A tariff hit to Alberta’s energy production would have a direct impact on Alberta’s royalty revenues and on employment and investment in a sector that generates other tax revenues. We would once again be facing the prospect of diminished fiscal capacity even as demand for public services increases due to population growth.
Albertans have become used to riding the resource revenue rollercoaster, but this will be different. The downturn will not be due to the usual vagaries of international markets with the prospect of a natural return to better times, but rather the product of policy decisions made by a foreign government. Albertans will not even be able to blame their favourite scapegoat, Justin Trudeau and the federal Liberals (though they might try).
This might precipitate a long overdue, grown-up conversation about how Alberta is going to sustain critical services, including public education. It will be crucial not to let the government of the day use these circumstances to justify simple-minded austerity and then to attempt to balance the books on the backs of teachers, doctors, nurses, post-secondary educators and other public servants. Other provinces that have not been blessed/cursed with abundant fossil energy have still managed to do a better and more consistent job of funding public services in the public interest—Alberta can and must do the same.
As teachers, we very much have skin in this game. Despite the temptation to stay on the sidelines, our leadership, advocacy and activism will be essential in shaping the course this province will take for years to come. ❚
Questions for consideration in this column are welcome. Please address them to Dennis Theobald at dennis.theobald@ata.ab.ca.
ATA Executive Secretary
