Canadian municipalities are seeing the effects of trade disruptions through higher project costs, supply-chain problems, delayed investment and pressure on local businesses, according to a new report from the Federation of Canadian Municipalities, the Lawrence National Centre for Policy and Management at the Ivey Business School and the City of London.
The report, Where Trade is Felt: Canadian Municipalities and U.S. Trade Disruption, examines how communities are experiencing trade-related pressures and responding to them, providing a national benchmark based on a survey of 31 municipalities in nine provinces conducted in May.
Local impacts
The report says 80 per cent of municipalities surveyed had taken steps to respond to trade-related pressures, rising to 100 per cent among municipalities reporting the highest levels of disruption. Responses included creating tariff-response teams, introducing Buy Canadian procurement initiatives, increasing outreach to businesses and strengthening efforts to attract investment.
The report also found that the impact of trade disruption varies among communities and is influenced by local economic conditions rather than population size. Municipalities with exposure to industries including auto manufacturing, oil and gas and steel reported different levels of disruption.
"This report reveals that impacts show up locally before they appear in broader economic data, whether it's shifts in business confidence, delayed investment decisions or challenges facing local employers," said FCM President Tim Tierney. "That's why understanding what's happening on the ground is so important to building an effective response to economic challenges, like tariffs."
Cost pressures and supply-chain disruptions were the most commonly reported severe impacts, the report said, along with delays or cancellations of investment.
The findings suggest municipalities can provide information on emerging economic pressures affecting businesses, residents and infrastructure projects before those effects are reflected in broader economic measures.
"The findings underscore the importance of local perspectives in identifying where trade pressures are emerging and how they are impacting communities across Canada," London Mayor Josh Morgan, who is also Chair of FCM's Big City Mayors' Caucus. "Municipalities bring real-time insights that can help ensure Canada's response reflects conditions on the ground. As the trade environment continues to evolve, working together will be essential to help communities adapt, strengthen local economies and build resilience for the future."
Recommendations
The report outlines three options for strengthening what it describes as the Team Canada response to trade disruption: ensuring the federal government uses municipal data and insights in its approach; improving the flow and timing of information to municipalities during disruptions; and addressing domestic barriers, including interprovincial barriers.
"The findings point to the value of drawing on municipal intelligence and local response capacity as part of the broader Team Canada effort in a rapidly evolving trade environment," says Professor Romel Mostafa, Director of the Lawrence National Centre for Policy and Management. "There is an opportunity to strengthen coordination and enhance consideration of local realities in national strategy and response, within the existing division of responsibilities across orders of government."
The research provides a snapshot of municipalities' initial responses to trade disruptions, although the report notes that the trade environment continues to evolve. It says the findings can serve as a benchmark for assessing how trade-related pressures emerge at the community level and how municipalities respond.
The report also points to local infrastructure investment as a way for communities to support businesses, attract investment and strengthen their ability to respond to changing economic conditions.