Around 100 people signed up for the Rural Islands Economic Partnership 2025 Virtual Forum. At least 10 were from Cortes Island and there were others from Quadra, Bowen, Texada, Hornby, Denman, Cormorant, Malcolm and the Gulf Islands, as well as the Broughton Archipelago. Several of the topics were of great importance to islanders. One of the foremost was Aaron Cruikshank’s analysis of the impact US tariffs will have on island economies and what we can do about it.
Cruikshank is the founder of CTRS, a Market intelligence company from the Lower Mainland that has worked with hundreds of organizations and governments over the past 20 years.
He began his analysis of President Trump’s actions by stating, “People are really focused on the tariffs, but the message I want to leave with everybody is it’s actually trade policy uncertainty disrupting economic patterns. It creates volatility in global markets. It leads to reduced investment, supply chain disruptions, and a contraction in economic activity which hurts everybody. I don’t care where you are in Canada, all of that is bad news, but I wanted to make clear that tariffs are just one example of something that contributes to trade policy uncertainty. We’re seeing others, and we’ll continue to see others that are going to make these numbers rise.”
He put up the chart above, which shows the relative uncertainty that Trump and some of the previous US presidents have created in international trade markets.
Aaron Cruikshank: “This chart goes back to 1960 and the index is based on the impact of policies. You see the baseline jumping up from 25 points to 100 points under Nixon and Ford, that was considered a very big deal in the 60s and 70s. Then in the 80s and 90s you had some spikes with Reagan and Bush. I believe the one with Reagan, or maybe it was Bush Sr., was to do with NAFTA.”
“If you look at these spikes that are happening during the first Trump presidency, where we’re getting into the 250 range. Very, very, very significant trade uncertainty policy. Then the most recent hockey stick growth there is just in the last couple of months where we’re getting up into the 450 – 500 range. We’re talking more than an order of magnitude above baseline for trade policy uncertainty. We also are hearing talk of President Trump or as I call him, ‘the orange turd,’ wanting to renegotiate the United States–Mexico–Canada Agreement, what some people refer to as NAFTA 2.0. That uncertainty makes people freak out. Threatening to withdraw from certain trade agreements makes the chart do this. Putting export controls on specific technologies or goods, that makes the chart do this, saying the US is only going to allow X amount of this good.”
“That affects countries like Canada a lot because we end up exporting a lot of raw materials into the US: lumber, oil, metals, minerals, things like that. We supply 80 percent of the US potash, which is used for fertilizer to grow their food. So, they might be putting import caps on things like that. That makes markets go “woo.’”
“Another one that really freaks people out is the unclear international policy on Taiwan. The majority of the world’s semiconductors and chips are made in Taiwan and the US traditionally has backed Taiwan against the Chinese government to say, ‘look China, if you’re thinking you’re going to take Taiwan, you’re going to have to answer to the US.’ Now they’ve backed right off and said ‘it’s fine,’ basically saying ‘we’re not going to back Taiwan if China decides to roll over on it’ is making that spike go crazy.”
“The abruptness of these changes is why you’re seeing these spikes.”
“94 percent of the businesses in Canada are small to medium sized enterprises. They represent 65 percent of the jobs, but these large companies have an outsized influence on our GDP because they’re the ones making the majority of the money.”
“If they make big plays, they hire lots of people. No one really likes chaos and big businesses want to see their profits grow sustainably. So when they see the chart do this, they’re going to be making some changes in the way they spend their money.”
“For rural island communities, this means it’s going to probably result in fewer customers for local businesses, disrupted supply chains and increased economic disruptions.”
“Here’s what we’re going to see happen in terms of impact on specific sectors of the economy. With the large enterprise private sector, which again drives a lot of the macroeconomic stuff that happens in our economy, they’re going to cut spending. They’re going to start laying off workers. The US is different from us of course, but in the last month they’ve just seen the largest private sector layoff since the 2009 economic downturn. Companies are laying off people left, right, and center because they want to preserve their capital. They’re going to reduce investment in equipment and infrastructure. They’re going to diversify their supply chain.”
“That’s good news if you’re not in their supply chain and there’s a chance you can get into their supply chain. It’s bad news if you’re getting a big chunk of their business because now they’re going to say, Oh, it’s risky to have so much of our supply chain come from this one supplier.”
“They’re going to reduce their spending with small vendors, and they’re going to increase prices on nearly everything because that’s how they’re going to make up their differences.”
“Government tends to get into heavy duty trade negotiations, economic stimulus measures, and direct support for affected industries. I’ve already heard announcements from the government saying they’ve got plans to do something to support the auto industry, tourism and different industries.”
“The downside is they tend to cut any programs seen as lower priority. That’s not necessarily good news for some of the island communities because there may be programming that gets cut. I’m not saying they will, I’m just saying traditionally that’s what governments would see as not a ‘must have’ for the survival of these communities. So you might see some of those programs getting cut. The government is definitely going to run up more of a deficit, but that’s normal. Every government has to do these things in those circumstances.”
Photo by Elevateon Unsplash
“Most importantly though, the impact on small to medium sized enterprises on the rural islands is higher costs for everything imported. You’re going to start to see more shipping delays, like we saw during COVID, where container traffic moving internationally is going to be disrupted.”
“We’re starting to see governments responding to the actions of other countries saying, ‘well, we’re not going to allow those ships to dock here,’ or ‘we’re not going to refuel those ships.’ I think we’re going to see more and more protectionist measures like that happening, and that is going to disrupt international supply chains.”
“I think we’re definitely going to see a decline in tourism revenue across the board because people worried about their disposable income are going to be cutting back on spending. We’re going to see reduced spending by the government and big businesses in these communities. Banks are going to be tightening their lending criteria because they’re trying to hedge their risks as well. They may raise the bar and say, well, if you don’t have this, this, and this, we can’t lend you any money. The interest rates are more centrally set by the Bank of Canada and they’re going to try and use that as a lever to reduce inflation but, the banks themselves can choose whatever lending criteria they want.”
“Oh crap, what do we do?”
“One of the things that really works is hyperlocalization of the economy and I know that this is something most of you are already familiar with so I don’t think I’m telling you something interesting that you haven’t heard before, but that’s extra important right now. Hyperlocalization reduces dependence on these volatile global supply chains. It keeps wealth circulating in your communities. It builds stronger economic and social resilience.”
“It does mean sometimes things cost a little bit more just because local suppliers can’t always sell you things at the same price that somebody like Costco or Loblaws can, but try to spend that money locally, buy from your neighbours. I know that this is stuff that a lot of you are already working on, which is developing small-scale food production, increasing reliance on regional fisheries, local crafts, and small manufacturing. Again, this sometimes means things are going to cost more, but you gotta look at it as an investment in your local community.”
“The next thing is community owned business models. One of the organizations I work with quite a bit is the food banks ecosystem. They’re starting to talk about doing things like just cost recovery. Grocery stores are saying, ‘look, we’re gonna set up a nonprofit.’ You could do it as a co-op as well. A buyer’s co-op might say, ‘Hey, we’re gonna buy food and dry goods at wholesale prices and then just sell it at cost to community members.’”
“So, I’ve seen that work really well in some communities. There’s also community based financing where you’ve got local investment funds. Credit unions often play an important role in that. There’s local bartering systems , it’s an old school idea, but at times like this, sometimes bartering is a great way to go.”
“A lot can be done around these ‘buy local’ initiatives. I’ve seen a lot of great stuff coming out of Island Good, which I believe is speaking on the panel right after this. These are place-based branding campaigns to boost local product demand and take advantage of the unity that we see right now across Canada. Canadians want to support Canadians.”
“It’d be great to see people say, ‘Hey, you know what? You can buy all the stuff you need from us.’ We’d love to do that.”
“You want to try to reduce over reliance on single industries. So if you’re in a community where the main source of income is tourism, obviously the idea is to diversify a little bit and create stable employment opportunities year round.”
“A lot of small businesses and the ones that Charisse and I are dealing with in the Campbell River area, are not familiar with e-commerce. It’s an awfully big hill for some of them to set up an e-commerce portal. One of the things that could be done is a local cottage industry that has a central e-commerce portal for local artisanal island companies. There’s one hub you can go to. It’s like the Amazon of the islands. That’s something that could be done to diversify the sources of revenue coming in, rather than relying on foot traffic to find you.”
“The second area is resilient business models.”
“One of the things we saw during COVID and we see in other parts of the world where there’s economic hardship is people transforming what they do to support what’s needed at that time. In this image we have island repairs. If somebody’s got a bike shop, they’ve got tools, they’ve got mechanical aptitude. Maybe they could be repairing other things than bikes and helping make goods that are durable last longer.”
“At times like this, we tend to see a lot of need for what I call central economy goods. These are repair services, local food production, sustainable construction, renovations, the kind of things that are must haves. You must have these things continue. If there’s any businesses locally that can add those services to what they’re already doing, fantastic.”
“Last but not least, infrastructure and capacity building. I know this is something that RIEP is really good at and I’d love to see more of that happening in the islands, to help the islands get resiliency. To make sure that all of these organizations are learning how to expand their digital infrastructure, to support remote work and e-commerce, and to strengthen community networks.”
“One of the things I heard in one of the breakout rooms was a comment saying some of these islands just don’t coordinate super well with one another. That’s an easy problem to fix. You’re not that far apart. There’s this thing called email. You could be emailing people, or making phone calls.”
“None of these things are easy to do. The best time to start these things, obviously, was ten years ago. The second best time to start working on these initiatives is right now.”
Aaron Cruickshank’s presentation was followed by a question period.
Mitch Miyagawa, the moderator for this session, read out some of the messages in the chat box.
Mitch Miyagawa: “Max Thaysen from Cortes Island asks ‘can you place climate change in the uncertainty chart? If it doesn’t show up, why and what does this tell us about this metric?’”
Aaron Cruikshank: “Climate change policy is part of that metric, but it’s to do with trade. Typically what you would see is if a climate change policy puts a barrier or an incentive into the economy. So under the Biden administration, for example, he had some trade policies that he put into place to try and ‘green’ the transportation sector. That had a lot of nice knock-on benefits for the US economy. It caused some international investment in the U. S. economy into battery production and into different things like this. So absolutely you can see that in the chart, but it’s not the only chart that is around. It is a super important chart if you want to know what’s happening with the economy, but there are situations where ESG (economic, social and governance) measures are not reflected in economic outcomes because we just haven’t gotten to the point. They should be. It’s one of the things I’m hoping to tackle with my doctoral thesis when I get to it.”
Mitch Miyagawa: “Question from Amy LeBaron, ‘what other factors besides Trump lead to spikes in your chart? Is it really all about him?’”
Aaron Cruikshank: “Trump is a symptom, like when you have melanoma you get a spot on your skin.There’s a sickness in their country right now and he is the melanoma spot on the forehead that tells you have skin cancer. There is a whole system behind him. I don’t think he’s capable of making these big swings that are happening. He’s got people telling him to go out on stage and say this.”
“I’ve done a lot of looking at who is driving these economic policies. What these policies are all reflective of is a certain philosophy in the U. S. that says ‘ screw you guys, we’re taking our ball and going home.’ It’s withdrawing from these international interconnectedness networks that have been developed over decades because their theory is that’s a good thing for the US. So, is it all about him? No, he is the melanoma spot on the American forehead.”
Mitch Miyagawa: “Paul Brand from Saturna asks, ‘What about U. S. tourists coming here? Our money is going to erode making Canada a tourism deal. How do we handle this?’”
Aaron Cruikshank: “There are lots of Americans who are sympathetic to what’s happening to us right now and they’re going out of their way to spend money in Canada, wherever possible. There are going to be other folks, probably the ones who voted for the ‘orange turd’ who will think that the right thing to do is to ostracize us because ‘how dare we’ respond to this economic warfare that’s being levied on us.”
“I think it really just depends on the demographics of the folks that are coming to visit the Gulf Islands. I suspect a lot of the visitors to the Gulf Islands are from up and down the west coast of the US. If that’s the case, they’re probably more sympathetic to the Canadian cause than ones that would be from the southeast or the southwest.”
“One of my clients is a major travel agency and they’ve hired us recently because they’re trying to find ways to deal with the way Canadians are responding to travel right now. We saw this during the pandemic. When the border was closed, and BC people couldn’t go south for vacations, it just about crushed BC Ferries because they weren’t prepared for the volume of people that wanted to go to the islands to spend their vacation dollars.”
“So I would suspect most of any decline that you might see in US tourism dollars is going to be supplanted by Canadians that want to diversify where they spend their tourism dollars. I don’t have a crystal ball on that, but that would be my guess.”
You have been listening to a highly edited and abridged version of Aaron Cruikshank’s analysis of the impact US tariffs will have on island economies and what we can do about it.
This is a highly edited and abridged version of Aaron Cruikshank’s presentation.
Links of Interest:
- The Rural Islands Economic Partnership website
- This Week: 2025 Rural Islands Economic Partnership Virtual Forum – Cortes Currents (Mar 3, 2025)
- Articles about, or mentioning RIEP
Top image credit: Some of Jo-Anne Thompson’s fancifull knit goods displayed at the January 2023 Mansons Friday Market – Photo by Roy L Hales
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