Provincial and Trade Relations Updates for Canadian Businesses the Week of September 19
Trade Relations Remain Strained
Canada-U.S. trade relations remain strained following the collapse of negotiations in August and the subsequent exchange of tariffs. Ottawa’s position has shifted from trying to meet a negotiating deadline toward waiting for conditions that can produce a more durable agreement. At the Canada Investment Summit this week, Prime Minister Mark Carney said Canada does not need to rush back to the negotiating table, emphasizing domestic investment and trade diversification while maintaining that Canada remains prepared to negotiate under the right conditions. More than 80% of Canada-U.S. trade reportedly remains tariff-free, but exposed sectors continue to face considerable uncertainty.
That uncertainty is increasingly shaping provincial economic decisions. Governments are responding through investment incentives, Canadian procurement, tax relief, energy development and efforts to attract new capital. The emerging strategy is less about waiting for Washington and increasingly about strengthening Canada’s ability to withstand a prolonged dispute.
What's happened in provincial government
Provincial governments are increasingly positioning energy, infrastructure and domestic investment as their response to economic uncertainty. New Brunswick is promoting major projects including wind generation, nuclear expansion, mining and data centres, although the planned temporary closure of the Nackawic pulp mill illustrates continuing pressure on traditional industries. Nova Scotia is seeking additional wind generation while introducing changes to labour standards. Newfoundland and Labrador has moved closer to negotiating definitive agreements on Churchill River power, while Manitoba is targeting a significant expansion of mining production.
Saskatchewan is considering large-scale nuclear generation as Bell proposes expanding its Regina-area AI data centre to 1.2 GW, potentially making it the province’s largest-ever private investment. Alberta plans to revise oil royalties to encourage production and infrastructure investment, while British Columbia has delayed expanding the PST to professional services until economic conditions surrounding the U.S. trade dispute improve.
Collectively, provinces are trying to stimulate investment while limiting additional costs for businesses already dealing with tariffs and economic uncertainty.
How this impacts businesses across Canada
- Investment & Major Projects: The federal Canada Investment Summit and provincial participation demonstrate an aggressive push to attract private capital into energy, mining, AI, infrastructure and critical minerals. New Brunswick, Nova Scotia, Manitoba, Saskatchewan and Nunavut are all positioning major projects for investment.
- Energy & Electricity: Saskatchewan’s potential nuclear development, New Brunswick’s wind and nuclear proposals and Nova Scotia’s new renewable procurement point toward significant opportunities for utilities, engineering, construction and clean-technology companies. At the same time, the extraordinary electricity requirements of AI data centres are becoming an increasingly important infrastructure consideration.
- AI & Data Centres: Bell’s proposed expansion of its Saskatchewan AI facility from 300 MW to 1.2 GW represents the scale of capital now moving toward Canadian AI infrastructure. It also raises questions around electricity generation, grid capacity, water, workforce requirements and associated infrastructure.
- Forestry & Manufacturing: The temporary closure of New Brunswick’s Nackawic pulp mill, affecting approximately 350 employees, illustrates how weaker market conditions and broader economic pressures are affecting established resource industries.
- Mining & Critical Minerals: Manitoba’s commitment to triple mining production over five years, alongside projects being promoted in New Brunswick and Nunavut, reinforces mining as an increasingly important component of Canada’s economic diversification strategy.
- Oil & Gas: Alberta’s planned royalty changes are intended to stimulate new production and help supply a proposed million-barrel-per-day pipeline, potentially creating significant opportunities throughout the energy, construction and professional-services supply chains.
- Business Costs & Taxation: British Columbia’s decision to postpone extending the PST to professional services provides businesses with near-term cost relief and demonstrates how the trade dispute is influencing provincial tax policy.
- Labour & Workforce: Nova Scotia’s proposed overtime and gratuity reforms, P.E.I.’s move away from some travel healthcare workers and Manitoba’s skilled-trades training delays reinforce continuing workforce and labour-cost pressures.
What to pay attention to moving forward
Watch for renewed Canada-U.S. negotiations, but don’t expect Canada to rush back. Ottawa’s current strategy appears to be to strengthen its negotiating position through domestic investment and international diversification while leaving the door open to renewed discussions. Carney said this week that Canada can wait for the right conditions rather than accept an agreement simply to restore stability.
Watch the investment pipeline. The Canada Investment Summit showcased 167 projects as governments pursue ambitious private-investment targets. Businesses in engineering, construction, energy, technology, professional services and advanced manufacturing should monitor how quickly these projects move from announcements toward procurement.
Watch AI’s energy requirements. Saskatchewan’s proposed 1.2-GW Bell facility is a particularly important signal. Data-centre growth could become a major driver of new generation, transmission and infrastructure spending across Canada.
Watch Canada’s resource strategy. Mining, nuclear power, oil and gas, critical minerals and major transmission projects are increasingly being positioned as economic resilience projects rather than simply regional developments.
Watch provincial business relief. B.C.’s PST delay demonstrates that governments may be reluctant to introduce additional business costs during the trade dispute. Other provinces could follow with tax, financing or regulatory measures if tariffs persist.
US–Canada Relations Overview
The past 10 days have produced an important change in tone rather than a breakthrough in negotiations. Ottawa is no longer signalling urgency to secure a deal with Washington. Speaking at the Canada Investment Summit, Carney said Canada can wait until the conditions exist for an acceptable agreement and argued that the country should use the disruption to strengthen its economy. Canada is simultaneously pursuing a major business-tax reform designed to lower the effective tax rate on new investment to approximately 6.4%, positioning the country to compete more aggressively for international capital.
Canada is also accelerating its pivot toward Europe. Carney has been pursuing closer economic and strategic relationships with European partners, including discussions around a new form of association with the European Union and cooperation in energy, defence, critical minerals and technology. Canada is also pursuing broader trade diversification, including renewed engagement with India, as part of a strategy to double non-U.S. trade over the coming decade.
The central relationship with Washington, however, remains unresolved. The August negotiations collapsed after Canada concluded that the final U.S. terms were economically unacceptable. Ottawa’s stated objectives remain maintaining broad tariff-free access, reducing tariffs on strategic industries and achieving greater long-term predictability.
Businesses should therefore watch for informal diplomatic engagement, movement on steel, aluminum and automotive tariffs, changes to U.S. procurement restrictions and signs that either government is preparing to restart formal negotiations. The next significant development may not be another deadline. It may be the point when economic and political pressure on both sides makes returning to negotiations more attractive.
Business takeaway:
Canadian companies should operate on the assumption that trade uncertainty will persist. The strategic response is increasingly clear: protect U.S. relationships where they remain commercially viable, while diversifying customers, suppliers and investment opportunities beyond the American market.
Recent News on the Trump–Iran War Situation
The U.S.-Iran conflict remains a major global economic risk, with attention increasingly centred on energy transportation through the Strait of Hormuz and Bab el-Mandeb. Vessel traffic through Hormuz has fallen dramatically. Reuters reports only 17 commodity vessels crossed over the latest weekend, compared with 37 the previous weekend and a pre-war average of roughly 125 vessels per day. Some oil continues to move through the region, but shipping patterns have become considerably more complicated and risky.
Tensions escalated again over the weekend following attacks by Iran-aligned Houthi forces on Saudi targets. President Trump has issued new threats toward Iran while also indicating that he could meet Iranian President Masoud Pezeshkian during the upcoming UN General Assembly. Iran has warned of significant retaliation if new attacks occur, leaving diplomacy and escalation running on parallel tracks.
Oil markets are reacting to both possibilities. Brent crude eased toward approximately US$101 per barrel on September 21 amid hopes of diplomatic progress and increased Saudi exports, but prices remain highly sensitive to developments in the region. Saudi Arabia has substantially increased shipments through Hormuz after attacks affected its alternative East-West pipeline route.
For Canadian businesses, the biggest concern remains the knock-on effect. Persistently high oil prices can raise diesel, aviation, shipping and manufacturing costs while contributing to inflation and interest-rate pressure. A prolonged conflict could therefore compound the effects of the Canada-U.S. tariff dispute, particularly for manufacturers, transportation companies, agriculture and businesses with energy-intensive supply chains.
Business takeaway:
Two very different geopolitical events are currently squeezing the same part of the balance sheet. Tariffs affect the cost and accessibility of trade, while the Iran conflict affects the cost of moving and producing goods. Canadian businesses should continue modelling both risks together rather than treating them as isolated events.