What will the impact be to WNY if trade talks don't resume with Canada? Economic expert weighs in

BUFFALO, N.Y. (WIVB) — What will the economic impact be in Western New York if a trade deal isn't made soon with Canada? That's what some experts are weighing after President Donald Trump announced Thursday that he was 'terminating' all negotiations.

In a post on Truth Social, President Trump wrote: "Based on their egregious behavior, ALL TRADE NEGOTIATIONS WITH CANADA ARE HEREBY TERMINATED."

This comes after the province of Ontario released an ad that included excerpts from a 1987 radio address given by President Ronald Reagan where he criticized tariffs.

Western New York is about as close as it gets when it comes to being neighbors with Canada. They both have a historically strong cross-border connection that shapes the area's economy.

While the effects of President Trump's 35% tariffs imposed on Canada over the summer may have increased some prices, it really hasn’t severely impacted local businesses that rely heavily on trade with the country, yet.

That all could change if a new trade deal isn't reached, according to Scott Barkowski, an economic expert, labor economist and associate professor for the University at Buffalo's Department of Economics.

Professor Barkowski tells WIVB News 4 that while, historically, the Trump Administration usually circles back and ends up making a deal in these cases, if they don't this time, it could have real implications in Western New York.

"There is a lot of commerce with Canada in the region, so it can have important effects, but I don't think that it will result in like a great depression in the Western New York area, for sure," Barkowski said. "It definitely could cause some job losses."

Those potential job losses would be seen at businesses that rely heavily on trade across the border. As it becomes more expensive for some of those businesses to get the products they need, there could be hiring freezes, scaling back of hours for employees, pay cuts, and even layoffs.

"Because of the uncertainty, businesses might be less likely to try and, for example, expand, which means that people who might have been hired, end up not being hired, or maybe they start becoming very worried that trade could be affected," Barkowski said. "So, they start pairing down hours, or maybe there's a worker or two that they're like 'well, we can't continue to keep them on.'"

The longer it takes to make a deal, the greater the uncertainty, which doesn't bode well for some Canadian businesses that might be looking to expand across the border, or businesses that are here and want to expand but rely on border trade, according to Barkowski.

"It makes it more difficult for businesses to know what decisions they're going to make," Barkowski said. "How can they know whether they need to open a new location if they're unsure if they're going to be able to get enough product in the future if they're like importing from Canada, for example?"

All of this being a worse case scenario if a deal isn't reached, but that's something Barkowski believes will happen. When you analyze the Trump Administration and their tactics in trade negotiations, the current situation with Canada mirrors instances with other countries where talks were stalled, strategically, but were picked back up with a deal later being reached. However, this time, it's with Canada, our second largest trading partner, and a pivotal collaborator when it comes to the economy of Western New York.

News 4's cameras caught up with Western New York's Democratic Congressman Tim Kennedy on Friday morning where we asked for his reaction to President Trump's decision.

"He's unilaterally creating a trade war," Congressman Kennedy said referring to President Trump. "With our greatest ally, our greatest trading partner, our neighbor to the north, Canada. It's unacceptable, it's unnecessary, it's hurtful to our economy."

Congressman Kennedy went on to raise serious concerns on how this could potentially impact businesses across Western New York.

"It's going to hurt the workforce in our community, businesses that depend on that cross-border relationship," Congressman Kennedy said. "It's infuriating."

Western New York's Republican Congressman Nick Langworthy also reacting to the decision, issuing a statement Friday morning where he slammed Canada and defended President Trump's decision to terminate negotiations.

“The baffling decision by Canada to spend $75,000,000 on a dishonest ad designed to deceive the American people and interfere with the Supreme Court is wildly inappropriate and deeply offensive," Congressman Langworthy's statement read. "No one wants a bilateral trade agreement more than I do, but we are not going to be manipulated by a foreign government in an attempt to turn Americans against their own country and weaken our negotiating position. The President was absolutely right to stand up for America against this gross breach of our diplomatic ties.” 

Canada was the United State's second largest trading partner last year, and the third-largest source of goods, according to data from the U.S. Census Bureau.