British Columbia depends on exports of goods and services to support income and employment growth, and to maintain viable regional economies across the province. For a small jurisdiction like B.C., sustained improvements in living standards are impossible in the absence of a strong export base. In fact, a key reason for B.C.’s waning prosperity in the last several years is the erosion of some of our foundational export sectors.
Given this, the current threat of across-the-board American tariffs has prompted the provincial government to focus more sharply on the risks facing B.C.’s trade-dependent economy. The importance of exports was underscored by Ministry of Finance modelling undertaken earlier this year. It showed that 25-per-cent U.S. tariffs — along with Canada’s retaliatory measures — would bring B.C. to the brink of recession, cutting projected GDP growth from 1.8 per cent to just 0.3 per cent in 2025, and to 0.8 per cent next year.
The ministry noted that with the U.S. accounting for more than half of B.C.’s international exports, the province would be especially vulnerable to tariff-related shocks — particularly in the manufacturing and natural resource sectors.
The modelling highlights B.C.’s evolving trade structure, noting that the U.S. share of the province’s merchandise exports declined from 65.8 per cent in 2000 to 52.8 per cent last year. This trend, the government argues, reflects a “long-term shift toward a more balanced trade structure,” suggesting that B.C. is perhaps better positioned than other provinces to weather changes in U.S. trade policy.
But this framing misses recent and less favourable trends. Using the year 2000 as a benchmark for comparing market diversification is misleading. That year coincided with the all-time peak in B.C.’s export dependence on the U.S., a little over a decade after the first Canada–U.S. Free Trade Agreement (inked in 1988) entered into force. Toward the end of the 1980s and throughout the 1990s, Canada’s industrial structure and trade mix adjusted to reflect the impact of free trade with our largest market. The same thing happened in B.C. over the course of the 1990s.
Since 2000, B.C.’s exports and our trade orientation have become more diversified compared to the 1990s.
In 2001, China’s entry into the World Trade Organization sparked a decade of rapid export growth to that rapidly expanding market (imports from China grew even faster). Meanwhile, over the 2007-11 period, U.S. demand for B.C. forest products slumped during the housing crash. The combination of surging Asian markets and the multi-year U.S. housing crisis pushed the share of B.C. exports destined for the U.S. down to a historic low of 43 per cent in 2011. That year also marked the high point for the diversification of B.C.’s trade portfolio.
Since 2011, B.C.’s reliance on the U.S. market has steadily increased. By 2024, 52.8 per cent of our international goods exports were shipped to the U.S. — a figure nearly identical to the 35-year average (52.4 per cent). So, the trend over the past decade is not greater market diversification but rather a return to the historical norm.
Meanwhile, an examination of B.C.’s exports to other key foreign markets tells a sobering story:
• After adjusting for inflation, B.C.’s exports to China are down 20 per cent since 2013;
• Exports to Japan have trended lower since 1996 and have diminished by one-fifth since 2013;
• B.C.’s goods exports to Korea have fallen by 11 per cent over the past decade; and
• Exports to India have slipped over the past five years.
In fact, the U.S. is the only major market where B.C.’s exports have increased — up 27 per cent since 2014 (adjusted for price changes). America now plays a more critical role in the province’s trade performance and economy than it did decade ago, contrary to the narrative often peddled by B.C. political leaders.
The bottom line: B.C.’s international exports — still largely composed of resources and related downstream manufactured products — have basically stagnated. Without growth in shipments to the U.S., total export volumes would be significantly lower.
Efforts to diversify trade, including ways to move our increasingly challenged economy forward, must begin with a clear-eyed view of the current picture and the competitive context. Because today, B.C. relies more on the U.S. to buy our goods than it did a decade ago.
Jock Finlayson is chief economist at the ICBA. Ken Peacock lives in White Rock and writes the BC Economic Brief (@kenpeacock on Substack).
