Tariff war forcing N.B. to cut trade barriers, go into deficit in next week’s budget

FREDERICTON — Nearly seven years after the New Brunswick government went to the Supreme Court to prevent the free movement of alcohol across the country, Premier Susan Holt says the tariff war with the United States is forcing the province to rethink its approach to trade.

Holt’s government is set to table legislation soon that would allow New Brunswick companies to sell alcohol directly to consumers in other provinces, and permit New Brunswickers to transport spirits across provincial boundaries, she said.

“New Brunswickers want to enjoy B.C. wines the same way folks in B.C. want to enjoy New Brunswick craft breweries,” the premier said in a recent interview.

“So, I think we have to break down the things that have prevented us from sharing the things that we’re great at.”

New Brunswick’s government wasn’t always so keen to see alcohol move freely across boundaries. In April 2018, the province won its case in Supreme Court against a man fined $300 for buying beer in Quebec and bringing it home to New Brunswick. The country’s highest court ruled that provinces can make laws to address particular conditions and priorities within their borders — even if those laws may incidentally restrict the movement of goods.

But now, facing punishing tariffs from United States President Donald Trump, Holt said New Brunswick can’t afford to keep its trade barriers up. Alcohol, she said, is just one of many products she’d like to see move more freely across the country.

If Canada reduces barriers to interprovincial trade, she said, “the estimate we’ve seen at a national level is around … a four per cent bump to economic activity.”

“So I hope we would see something similar here in New Brunswick.”

The looming tariffs are not just influencing New Brunswick’s legislation on trade, it’s upending the budget, which is scheduled to be tabled next week — and which is her government’s first since winning the October election.

Preparing the budget has been tricky because Trump’s tariff policy is still largely unclear: he imposed tariffs of 25 per cent on almost all Canadian imports in March — with a lower 10 per cent levy on Canadian energy — only to delay the implementation of the duties until April. Trump also said that on Wednesday he would tariff Canadian steel and aluminum 25 per cent; but for a few hours on Tuesday he had raised the tariffs on those two products to 50 per cent.

Last week, Canada imposed 25 per cent tariffs on $30 billion in goods imported from the U.S., and said it would slap duties on an additional $125 billion of goods “should the U.S. continue to apply unjustified tariffs on Canada.”

All the uncertainty, Holt said, has made it “exceptionally difficult” to balance the budget. “Anybody who looked at the situation in November, as soon as Trump opened his mouth about tariffs, watched investment and employment dry up .… The reality is that we’re facing a deficit,” she said.

“We’re trying to balance what is in the best interest of New Brunswickers for the long term. What can we manage? Because we need to measure twice and cut once.”

If Trump makes good on his threat to impose 25 per cent across-the-board tariffs on Canadian goods, then New Brunswick’s expected growth in gross domestic product will decrease by 30 per cent, she said.

The province’s top exports are petroleum products, including home heating oil and fuels to much of the Eastern seaboard. Other important exports include seafood, forestry and agricultural products. About $12 billion of goods crosses the border from New Brunswick to Maine every year, she said.

And with an anticipated drop in revenue, the premier said hard choices need to be made. But Holt said her main promise in last year’s election campaign to resurrect the flailing health-care system will be maintained. Those promises included opening at least 30 clinics across the province over three years.

“The budget makes a clear priority of transforming primary care, making sure that we have the tools we need, the information systems we need to get every New Brunswicker and every health-care professional their health information to deliver them better care,” she said.

“So we are not compromising on that promise in the face of tariffs. But we need to do both. It’s a balancing act, right?”

While she is dealing with the mental callisthenics of a mercurial American president, Holt is working to ensure the government finds other markets that share “similar values and similar economic structures” to diversify trade.

New Brunswick boasts not just petroleum, lumber and lobster but also much-valued mineral resources that are in high demand around the world, she said. “We have unique deposits of minerals in New Brunswick that could generate good-paying jobs and opportunity.”

This report by The Canadian Press was first published March 12, 2025.

Hina Alam, The Canadian Press