Brewing U.S.-China trade dispute may spell opportunity for Alberta companies

Alberta companies may benefit slightly by taking advantage of a blooming trade war between the United States and China, a former trade representative says.

Former trade envoy Gary Mar says market growth possible but global economy will suffer

Gary Mar was an Alberta cabinet minister before representing the province's trade interests in the U.S. and Asia. (Jeff McIntosh/Canadian Press)

Alberta companies may benefit by taking advantage of a brewing trade war between the United States and China, a former trade representative says.

Gary Mar, a former Progressive Conservative cabinet minister, represented Alberta's trade interests in Asia and Washington, D.C., until a few years ago. He's been watching the trade tensions closely.

This week, U.S. President Donald Trump threatened to slap tariffs on $50 billion in Chinese imports. Late last month, China announced it may put higher tariffs on a $3-billion list of U.S. goods, such as apples, steel pipe and pork.

"Every time that there are disputes over trade, it represents risks and opportunities," Mar said Thursday morning.

"In further context, China is Alberta's No. 2 trade export destination. We move somewhere in the range of about $3.5 billion in exports a year. It's a growing market. It's tripled over the last 10 years."

If the back-and-forth develops into a full scale trade war, the result would be bad for the global economy and U.S.-reliant Canada, while also, he said, benefiting a few opportunistic Albertan producers.

Mar joined Calgary Eyeopener host David Gray to discuss the risks and opportunities facing companies in this province.

Q: Will Alberta companies find themselves in a position where they'll have to choose sides in this?

A: There are some Alberta companies that are, by reason of their industries, deeply integrated with the United States, so you've got beef production that's very integrated with the United States.

It may be more difficult for independent Canadian owned and operated companies. Maybe it represents an opportunity.

If you look at the proposals by the Chinese to put tariffs on U.S. products, there's 106 products on the list. If you look at the majority of those products, the tariffs are intended to hit the United States square in the farm belt.

China has threatened to raise tariffs on the U.S. pork industry. (Charlie Neibergall/Associated Press file photo)

The reason why, I think, is because the farm belt is a major constituency of Donald Trump's political support.

The second reason, of course, is that it represents a significant trade export volume to China. Tariffs like beef, soybeans and pork, they represent an opportunity for Canadian companies to crack into a very competitive market in China.

That could be a good thing for Alberta companies but it also represents a risk in the sense that if that American pork or soybean is not going to China, it's going to go somewhere else.

It may create competitive risks for Alberta products that are going to other marketplaces other than China.

Q: Is that a real opportunity for Alberta producers?

A: It may be and it'll depend on a case-by-case basis. I have no doubt that Canadian trade commissioners are sharpening their pencils, working on trying to redouble their efforts to meet with the large buyers of agriculture products like pork, and figuring out whether that represents an opportunity.

U.S. President Donald Trump and Chinese President Xi Jinping have been ratcheting up trade tensions in recent weeks. (Qilai Shen/Bloomberg)

If this goes to this test of wills between Beijing and China, and Donald Trump and the White House, [and] becomes a full-scale trade war, it will disrupt supply chains. It has the potential to derail economic recoveries. It has the potential to destabilize certain economic plans.

Overall it wouldn't be good for the world economy but it may represent some opportunities for some Albertans and Canadians.

Q: What would be your recommendation to the oil and gas industry, or are they pretty much untouched by this?

A: The Chinese have certainly been interested in acquiring the kinds of technologies that have long been established in North America for things like fracking and other types of oil field technology. These are the very types of things that Donald Trump is trying to prevent China from acquiring.

Oil and gas companies may find a bigger market for the products in a U.S.-China trade dispute but will struggle to get those overseas, Gary Mar says. (Norm Betts/Bloomberg News)

That may represent an opportunity for Canadian companies to be selling certain kinds of technology that is used in the oil and gas field.

Would there be opportunity for selling more oil and natural gas? The answer is yes, but the issue is how do you get it there?

That remains the core issue for Canada's opportunity to increase its revenues that come from the energy sector.

This interview has been edited for length and clarity.

With files from Donna McElligott and the Calgary Eyeopener.