As the Canada-United States-Mexico free trade agreement review sets to start in July, the federation representing over 2,000 municipalities across Canada is seeking some certainty about the economic trade war. 

Rebecca Bligh, president of the Federation of Canadian Municipalities, said a significant amount of municipal procurement costs and supply chains are indirectly tied to the deal, known by its acronym, CUSMA. 

“Municipal procurement is a big piece in terms of increasing costs and inflationary pressures around budgets that already exist,” Bligh said in an interview with iPolitics. 

“The renewal of CUSMA provides some stability and certainty in terms of those existing agreements, and at a time when there’s even broader international uncertainty,” she said.

Currently, the total public procurement in Canada costs over $300 billion dollars. Of that, about $37 billion comes from the federal government, while municipalities alone spend more than $35 billion on goods and services from international markets. Ontario’s municipal annual procurement alone amounts to $22 billion dollars.

With municipalities responsible for more than 60 per cent of Canada’s infrastructure, including roads, changes to cross-border trade rules could have direct implication for local construction costs, Bligh said.

“We continue to push on the federal government to acknowledge the fact that nothing really moves in our country without traveling on municipal roads, bridges,” she said. 

FCM said it’s important for Ottawa to invest in local governments, especially in building and renewing infrastructure. 

She added the uncertainty of the trade agreements impact is also felt within the community. 

“Residents are experiencing a decline in business as well as… job losses and increasing costs, so that combination can create a lot of tensions,” she said. 

Buy Canada strategy

Carlo Dade, director of international policy and the new North America initiative at the School of Public Policy at the University of Calgary, said the uncertainty during the negotiation is a legitimate concern. 

“It’s that uncertainty as to prices going forward that will really harm Canadian companies,” Dade said in an interview with iPolitics.

Dade said while Canada awaits CUSMA renewal, policymakers should prepare for the possibility of tariffs returning, with the possibility of a baseline of 10 to 15 per cent. 

He added that while Buy Canadian policies are often discussed, municipalities need to look beyond their immediate suppliers and understand where key inputs are sourced. Companies that appear Canadian or American may rely on materials from other countries that could be affected by tariffs, he said. 

“Municipalities are going to need that sophistication in supply chains to understand how to mitigate shocks as one country taxes another,” Dade said. 

Dade pointed to Calgary as an example of a city that has mapped not only its direct suppliers but also where those suppliers source their inputs. 

He said other municipalities may need similar supply-chain analysis, with smaller communities relying on provincial governments for support.

While Canada on a federal level has a trade commissioner service that provides market intelligence and connects firms with foreign partner, Dade said there’s no comparable system to help businesses locate partners within the country.

“It’s hard to fathom that the Americans would make an exception for us, so you’re going to be looking at increased prices.” Dade said. “That’s just the reality going forward.”