The immediate impact of US tariffs and Canadian retaliatory measures on the Northwest Territories economy, and its residents, wasn’t clear on Saturday night.
Governments, businesses and residents were frantically picking through the two countries’ announcements to better understand how they will be affected.
NWT Premier RJ Simpson said the territory is “not immune” despite its lack of a land border with the US. In a Saturday night statement, he said the GNWT will move to halt purchases of US liquor and cannabis and end procurement involving American firms “where possible.”
The NWT’s main industry is diamond mining. Some in the diamond industry had already expressed concern before Saturday about the impact on them.
One company that markets and distributes NWT diamonds told Cabin Radio on Thursday that tariffs were likely “to be tough for us.”
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“That’s probably the biggest concern on our hearts right now, with being a Canadian company and getting our product out of Canada into the globe,” the company said.
On this page we’re starting a Q&A that we’ll update regularly with information specifically for people in the NWT.
If you own a business in the NWT, at the bottom of this page there’s a form you can use if you’d like to help us inform our audience about how US tariffs and Canadian measures are likely to affect you – and any steps residents can take to help.
Many Canadians were scouring the internet over the weekend for advice on how to best direct their spending to support Canadian firms.
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You can also use the form if you’re a resident with insight into how you and others might be affected or if you have questions for governments and industry leaders involved.
Here’s the Q&A. Check back for updates – we’re adding a timestamp and a list of updates here when things change.
Latest updates: 15:11 MT – Sun, Feb 2
This update included the following additions:
- Commentary from the NWT and Nunavut Chamber of Mines on the impact of tariffs with regard to mining, particularly critical minerals
Updates earlier included:
- Clarification that existing stock of US liquor will still be sold at NWT stores
- The GNWT’s view that additional measures could happen but will need coordination with other jurisdictions and the business community
- The full list of Canadian retaliatory tariffs due to activate on Tuesday
- A statement from Restaurants Canada
- Views of a Yellowknife lawyer on support for vulnerable people
- A note on the likelihood that impacts on food prices may take time
What are the basics?
New US President Donald Trump chose on Saturday, February 1 to impose 25-percent tariffs on all Canadian goods heading into America except the energy sector, such as oil, which will be subject to a 10-percent tariff.
A tariff is a tax paid in the country doing the importing. In this instance, that means American companies (and possibly consumers) pay the extra 25 percent to the US government, which keeps the cash and can use it how it likes.
The idea is that the tariffs push up the prices of Canadian goods in the US. If firms and residents in the US keep buying those goods even with the tariffs, the US gets more revenue. If they stop buying those goods because the price went up, Canadian sales suffer.
Trump has said he’s doing it because he wants Canada to cut down on fentanyl and illegal immigration at the US-Canada border, but the consensus among experts is that the issue is nowhere near as large as Trump makes it out to be, and Trump has ignored significant Canadian efforts to address his concerns.
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There are lots of guides elsewhere to the basics of tariffs and how this is expected to work. Here’s a good one that’s quite easy to follow, or you can watch this four-minute video from November that’s slightly out of date but helps set the scene.
Canada’s retaliatory measures outlined by Justin Trudeau on Saturday included 25-percent tariffs against US goods valued by him at well over $100 billion. He said some tariffs would kick in after a three-week grace period to give Canadian companies time to find alternatives.
Products made in the US that Trudeau said would be affected by Canada’s own tariffs include:
- US beer, wine and bourbon;
- fruits and fruit juices;
- vegetables, perfume, clothing, shoes;
- appliances, furniture, sports equipment; and
- lumber and plastics.
Trudeau said there could be “non-tariff measures” related to critical minerals – an area where the NWT has a significant interest – and other sectors. He did not elaborate.
Canada published on Sunday a full list of retaliatory tariffs due to kick in on Tuesday. They include tariffs on US meat, dairy, fruit, tea, chocolate, pasta, liquor, tobacco products, guns and ammunition, soap, wood, furniture, clothing and a range of other items.
We’re not going to get any further into the analysis of why this is happening and what the broader economic picture for Canada and the US might be. The rest of the Q&A focuses on the NWT.
What are the key points about the NWT impact?
The territory’s major industry is diamond mining. Diamonds usually go through a lengthy chain that involves multiple countries, and we’re waiting to learn more about the specifics of where US tariffs and Canadian retaliatory measures might affect that.
We have already heard from one diamond distributor and market that says it expects to be hurt by tariffs, though those comments came before the weekend, when it was hard to analyze the possible impact in any detail.
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The retaliatory measures announced by Canada have the potential to increase food costs in the North – which are, of course, already some of the country’s highest in isolated communities – by cutting off US sources of some products. The exact impact of that is not immediately clear, and the likelihood is that price increases would appear gradually as existing supplies are replaced. Some companies might choose to absorb the impact of tariffs for a limited period if they believe the tariffs will be short-lived. If tariffs persist, the impact is likely to become more obvious over time.
“We are not immune to the repercussions of these tariffs. Our economy, businesses, and communities will feel the ripple effects, and our government is committed to closely monitoring these impacts and addressing them wherever possible,” said the territory’s premier on Saturday night.
Measures related to critical minerals could have some impact on NWT projects. In recent months, more than one northern project has announced joint US-Canadian investment worth tens of millions of dollars. A chasm emerging between the two nations could threaten funding agreements like those and, more broadly, could interrupt efforts to build an integrated North American critical minerals supply chain that both nations said they wanted to construct as a rival to China.
“The North American economy is completely interconnected and a trade war with the US will be mutually painful,” NWT and Nunavut Chamber of Mines executive director Karen Costello told Cabin Radio on Sunday.
“Looking at NWT’s mining industry, producers will see increased costs for equipment and other materials sourced from the US resulting in higher operational costs,” Costello wrote.
She said the lack of exemptions for critical minerals in either US or Canadian tariffs, despite Trudeau mentioning them on Saturday, felt like “rather a contrarian move since the US is funding critical minerals projects in Canada, including in the NWT, in order to develop more secure global supply chains for the raw materials it needs for the energy transition, new technologies and defence.”
Trudeau urged Canadians on Saturday to buy locally, support Canadian businesses and travel within Canada, too, which might prompt a minor boost in NWT tourism from Canadian residents if people take him up on that challenge.
We’ll update this section as more information comes in.
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Which NWT businesses are especially vulnerable?
We’re asking lots of businesses right now to establish that.
As we learn more, we’ll post updates here – particularly if there are obvious choices NWT residents can make to shift their shopping habits in a way that would help businesses based in the territory.
Restaurants Canada, a national not-for-profit representing the food service industry, said Canadian and US food production and food service industries “are deeply intertwined, so any action that affects one will inevitably hurt the other.” It has asked the federal government to “consider exempting food and food packaging” from retaliatory tariffs. There are some 40 to 50 restaurants of various shapes and sizes in Yellowknife alone.
Peter Adourian, of the Yellowknife-based Adourian Law Office, said vulnerable communities of people need to be remembered alongside businesses if tariffs begin to bite into the NWT’s economy.
“Most of your neighbours are closer to being homeless than being multi-millionaires,” he wrote. “Do not pause your local charitable donations – let’s not sacrifice our local needs because of international troubles. Landlords, be kind to your tenants who can’t make the rent. Buy local, and also give local. Invest in Yellowknife and it will thrive.”
(Again, if you think your business has a message for NWT residents that’s relevant, use the form below.)
What changes might I see in the NWT?
The territorial government is following the lead of southern provinces, where liquor from the US – particularly Republican-controlled states – is set to disappear from shelves in short order.
Simpson said NWT government staff are “reviewing our procurement policies to eliminate purchases from US companies where possible and halting the Northwest Territories Liquor and Cannabis Commission’s purchase of American goods.”
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Note that you’ll probably still be able to find US liquor at your local NWT store this week. Existing stock can still be sold, on the grounds that the territory’s stores have private operators who would have to eat the cost if the sale of existing stock was halted. They aren’t really the intended target.
Simpson added: “We will continue to identify meaningful ways to stand in solidarity with our fellow Canadians.” On Sunday, a spokesperson clarified that further actions would most likely “require coordination with other governments and engagement with the business sector.”
Range Lake MLA Kieron Testart said the federal government should drop Parsons, a major US contractor, from its role as manager of the Giant Mine remediation site outside Yellowknife.
He also wants a 25-percent tax on American outfitters operating in the NWT, though critics of that suggestion have said it would needlessly inflate the cost of some Canadian vacations and a consequent loss of business could affect locally owned airlines, hotels, restaurants and support services.
Tariffs theoretically don’t directly affect tourism. Simpson has called for Canadians to take vacations in the North to keep money in the country, while the exchange rate between the US and Canadian dollar could make an NWT vacation more accessible to American tourists, leaving tour operators in the position of being possible beneficiaries.
Glenn Smith, Hay River’s town manager, said the disruption of trade between the two countries introduces a “real risk” that some infrastructure projects could come to a halt.
The NWT already struggles in some years to get through all of the projects various levels of government are trying to accomplish, either through a lack of available contractors or issues procuring the supplies needed on time.
Are there any US products the NWT relies on?
Firstly, there are other guides to buying Canadian, and you can also find Facebook groups devoted to it. (Arguably you could also stop using Facebook, which of course is a US product owned by a man who was front and centre at Trump’s inauguration. We’ve contemplated starting a Facebook rival but it seems like it might be more than a weekend project.)
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Starlink, which is owned by US billionaire and central Trump administration figure Elon Musk, is an early candidate for the wrath of some Canadians who are also calling for 100-percent tariffs on Tesla cars.
Dropping Starlink could be an awkward decision for NWT residents in isolated communities where the company’s service has made internet access easier and, in some cases, cheaper.
NWT residents are particularly reliant on vehicles for winter travel across long distances. Disruption on a massive scale to the North American auto industry appears inevitable, which might also affect the availability of replacement parts for the likes of cars, trucks and even snowmobiles.
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Correction: February 2, 2024 – 16:04 MT. This article briefly referred incorrectly to Karen Costello as the NWT and Nunavut Chamber of Commerce executive director. There is no such institution, we meant the NWT and Nunavut Chamber of Mines. We’ve corrected the error.
