Trade war: Municipalities re-evaluating contracts with U.S. suppliers to protest Trump’s tariffs

Municipal governments do not have the same financial clout that provincial and federal governments do in fighting back against U.S. President Donald Trump’s threat of 25-per-cent tariffs on almost all Canadian goods. But in many ways they are just as vulnerable to the economic impacts of a trade war.

 

Jobs can be lost instantly. Companies can shrink, shut down or move quickly if the impacts are severe enough. Property-tax revenues can take a direct hit within a year.

 

And so Canadian cities are using the tools at their disposal to mount a defence. Many of them have begun re-examining their procurement budgets, looking for ways to inflict as much pain as they can on American suppliers.

 

“Municipal procurement is not a small amount of dollars,” said Josh Morgan, the current chair of Canada’s Big City Mayors Caucus, which represents more than 2,100 cities.

 

Vancouver, for example, reported that it buys about $6-million worth of goods from American suppliers – Amazon is one of the bigger ticket vendors at $385,000 in payments from the city in 2023 – in a budget of $2.4-billion. In Toronto, less than 10 per cent of its procurement is estimated to be from U.S. sources.

Multiply those small amounts by the hundreds of cities across Canada and it starts to have an impact, said Mr. Morgan, who is also mayor of London, Ont.

 

Earlier this month in British Columbia, Surrey Mayor Brenda Locke deferred a vote on a $700,000 contract with an Indiana company for mobile bleachers, pending research on whether it can legally cancel the deal.

 

In Vancouver, council passed a motion directing staff to look at dropping American suppliers and switching to local or Canadian businesses, while the suburbs of Delta and Burnaby also expressed interest in eliminating U.S. producers from their acceptable-bidder list.

 

In Montreal, Mayor Valérie Plante said her city would no longer make any purchases from Amazon and threatened to impose a 25-per-cent “penalty” on other American suppliers.

 

In Ontario, almost a dozen city councils are examining their budgets to see how much they buy from the United States and what policies they should develop to switch to local suppliers. Toronto forged ahead, in spite of some cautions from their city manager, and put a “buy Canadian” campaign in place.

 

Saint John Mayor Donna Reardon said her council is extremely concerned that the current trade agreement is not being respected and that is a “call to action” for her city and the whole country.

 

Like many mayors, she said most of the city’s purchasing is done with Canadian companies.

 

“However, with potential tariff actions, we are taking extra steps to prioritize Canadian-made goods and services where possible to protect against economic impacts.”

 

A study by the Canadian Chamber of Commerce released earlier this month listed which cities will be hurt the most because their local economy is so dependent on U.S.-bound products such as oil or cars.

 

In the top three spots: Saint John, Calgary and Windsor, Ont., with nine other Ontario cities in the top 20.

 

That’s why some city councils are looking not just at buying local, but also what kinds of financial support to offer.

 

The City of Laval is putting up $4.5-million to help local businesses adapt. In Vancouver, the motion to buy local also includes a long list of actions the city should consider to help boost local businesses, everything from possible property-tax deferrals to reduced fees to new kinds of licences that allow more flexibility in the kinds of activities a business can host on one site.

 

Federation of Canadian Municipalities president Rebecca Bligh, also a Vancouver city councillor, said cities are taking action in part to overcome the sense of helplessness some Canadians might feel.

 

“Where it feels like there’s a lack of control, everyone needs to feel like they can work together,” said Ms. Bligh, who was part of the Canadian contingent to Washington last week that included provincial premiers.

 

Some of what cities are doing in recent weeks is symbolic, said McGill professor Vivek Astvansh, who specializes in management and business analytics.

 

But it’s also substantive: Local businesses also gain credibility when they act as reliable suppliers to government.

 

“City governments spend a lot of money and selling to governments has benefits to suppliers. It’s not just the dollar impact but the signalling.”

 

But Mr. Morgan, who was also part of last week’s Washington delegation, is also cautioning that cities should be careful about how they construct buy-Canadian policies to ensure countertariffs or other measures don’t end up hurting Canadians more than they help.

 

“If there are countertariffs, we want them where there are Canadian alternatives we can shift to.”

 

As well, he said, it gets tricky to assess whether something is Canadian or not because the two countries, thanks to decades of meshing their economies, often see products go back and forth across the border multiple times before turning into a finished item.

 

Most Canadian steel and aluminum is processed in the U.S., then comes back as construction parts or soda cans, and Canadian wood is often shipped raw to American mills, returning as usable lumber.

“There’s been a lot of integration. This thing we built up, it’s really hard to start to dismantle.”

 

Mr. Morgan said Canadian city politicians, through the Federation of Canadian Municipalities, have been talking to their American counterparts, who are equally dismayed at the current turmoil and economic instability that Mr. Trump’s on-again, off-again tariff threats are creating.

 

“American mayors, they totally get this, that tariffing a Canadian good is a tax on Americans.”

 

He said they are equally alarmed about the impact on their communities, in an integrated system where the main export customer for more than 30 American states is Canada.

 

Mr. Morgan said, so far, the cities, provinces and federal government have been working incredibly well together, with the federal government’s proposed countertariffs on $30-billion of U.S. goods being “pretty strategic.”

 

“Seeing all these levels of government working together – I’ve never seen that before. The level of collaboration gives me a lot of optimism.”

 

 

 

 

This article was first reported by The Globe and Mail