Canadians are about to find out what Mark Carney meant by ‘sacrifices’ — and it’s not pretty

The prime minister’s remarks last weekend reflected a similar faith in the underlying strength of our economy. “Canada is becoming stronger and less dependent on America. We are already giving ourselves more than they can take away,” Carney said. “And we are just getting started.”

As the argument goes, some sectors will take a beating and require a reinvigoration strategy, but the economy overall is robust enough to carry on and flourish. Looking at a test case that moves beyond charts and graphs, however, we can see what actual people in the communities around those pain points are facing.

In Sault Ste. Marie, Ont., it’s become harder and harder to confine the impact of the trade war to layoffs and strategic production changes within factory walls.

The border city of 78,000 leans heavily on Algoma Steel, which has been staring down tariffs since Day 1 of Donald Trump’s second administration. The company has made significant moves to “pivot” — by expediting the electrification of its processes and, just this week, announcing it will provide plate steel for an $11 billion federal plan to build new icebreakers for the Canadian Coast Guard.

It’s a model for innovating and finding new ways to do business — but along the way, Algoma issued layoff notices to 1,000 workers to make way for the changes. Now, uncertainty has an icy grip on the city’s psyche, says Nat Cicchelli, executive director of St. Vincent Place, a local food bank, soup kitchen and thrift store.

“This is a cautious time,” he said. “You don’t have the jingle in your pocket.”

Before the COVID-19 pandemic, Cicchelli said, the food bank would normally offer services to between 10 and 15 households in the first week of a given month. Numbers would climb a bit over the following weeks, peaking around the 20th day, when government supports would start to run low, he said.

In the first week of this month, St. Vincent Place served 53 households. And lately, numbers have been peaking around the 10th day of the month, indicating government supports are running out sooner.

It’s not just tariffs and job uncertainty fuelling a sense of precarity. It’s also an influx of newcomers and students who don’t know where to turn at a time when food has become alarmingly expensive. Add it all up, Cicchelli said, and what it means is vulnerable people in a rut have fewer opportunities to get out of it and stabilize their livelihoods.

In other words, for Canada to thrive amid this trade war, we need to achieve all those goals the prime minister so frequently lists — cultivate new trading partners, develop more reliable supply chains, invest in electricity and infrastructure, bolster our defence sector — while also ensuring regular people are along for the ride.

Not just in spirit, but materially.

There is the potential that this trade war could cause significant long-term collateral damage to our society — unless we take a distinctly Canadian, humane view of how to cope and, eventually, prosper. It’s hard work, and it involves even harder policy choices.

So far, after more than a year of efforts to diversify trade and attract investment, we’re seeing a steady increase in Canadian exports to countries other than the United States, although this is mainly attributable to gold sales to the United Kingdom.

The share of Canada’s exports that go to the U.S. is hovering around 70 per cent. That means we’re less dependent on our southern neighbours than we were a year ago, when between 75 and 80 per cent of our exports would regularly end up stateside. But our nations’ economies are still deeply entwined.

“We see little evidence that Canada has meaningfully diversified its trade,” says Jay Zhao-Murray, chief economist at research firm Sibley Creek. “What looks like a decrease in the share of U.S.-bound exports has been driven almost entirely by one product — gold — sold to one buyer and tied to a historic rally in global gold prices.”

Ottawa has been laser-focused on driving up investment, using the federal balance sheet to secure private-sector financing in Canadian projects. And Carney will host a summit next month with institutional investors from around the world. But even if these initiatives gain traction, they won’t stave off economic hardship unless they also spread the wealth.

Political leaders seem to at least pay lip service to this notion, trotting out familiar pandemic-era slogans like “we are stronger together,” “the government has your back,” “whatever it takes for as long as it takes” and so on.

The liquidity solutions and financial supports on offer for troubled sectors sound familiar, too, as do reassurances that Canada’s fiscal situation is better than other countries’ and that we can afford to fight. There’s no doubt that, in some ways, the turmoil this trade war causes could rival what we experienced with the pandemic economy.

Thankfully, we learned some things then that will be useful in today’s crisis.

First, that targeted, generous government support for people who’ve been sideswiped by crisis is appropriate and can make a major difference, provided there’s an exit strategy that doesn’t stifle innovation.

Second: we can’t make the mistake of thinking this will be over quickly and everything will return to “normal.”

Third, that low-income people will pay the highest price, and that the preservation of social cohesion and public trust is at the centre of democratic stability — the kind that has long been Canada’s calling card when it comes to trade and investment.

And last: for these rescue efforts to work for Canadian businesses and Canadian people, we need to allow for both time and humanity.

So when Carney boasts that in his next budget we’ll see measures to ensure Canada remains competitive and attractive to investors, one hopes we will also see measures to ensure the sacrifices he warned Canadians about last year don’t undermine our fine balance.

It’s in this light that Carney framed the need for fair taxation, designed to encourage an entrepreneurial spirit and “shift the burden to those who are most able to pay.”

Unlike last year’s mention of sacrifice, that remark wasn’t vague.