Prince George city council advanced its response to the ongoing U.S.-Canada trade war at its Monday, March 10 meeting, passing several motions after a discussion on the city’s procurement practices.
Heading into the meeting, director of finance and IT services Kris Dalio had been tasked with preparing a report on how the city acquires goods and services and how Prince George could prioritize purchases from Canadian sources.
He warned councillors that the situation seems to change day-by-day and has already been proven right since the meeting ended.
The morning after the council meeting, U.S. President Donald Trump announced that in response to Ontario Premier Doug Ford promising to place a 25 per cent export tax on electricity his province sells to America, he will raise the tariffs on Canadian steel and aluminum from 25 to 50 per cent effective March 12.
That same day, Ford backed down when U.S. Secretary of Commerce Howard Lutnick invited Canadian officials to Washington, D.C. for a meeting on March 14.
Dalio said that while tariffs will have an impact on the city’s budget, the volatility of the situation means he can’t quantify it just yet.
What the city can do to respond to the trade war is an entirely different matter than what it should do, he explained.
While the city is bound to include proponents from the rest of Canada, the European Union and the United Kingdom if the value of goods or services exceed certain thresholds, Dalio said municipalities are not subject to the Canada-U.S.-Mexico Agreement.
However, he said some kind of blanket ban on American goods would affect the city’s IT services, which use Microsoft products, and other city departments that need mechanical components that can only be sourced from the U.S.
“There would be large costs and/or efficiency consequences to move away from goods such as those,” Dalio said.
He added that defining what is or is not an American supplier can be tricky. For example, many American manufacturers sell their products through dealerships based in Canada.
“If we restrict those companies, we may be harming a Canadian dealership in the process,” Dalio said.
“If we’re trying to define what is Canadian or American, is it based on ownership percentage of that company or where the manufacturing plant is based? Do we go further down the supply chain to see if a Canadian company manufactures with American raw goods? It’s not so clear cut … we should look for ways to support Canadian companies where we can, of course, but I really want to be careful of unintended consequences.”
Placing restrictions on procurement, Dalio argued, generally leads to higher prices and goods of worse quality.
While there has been a lot of discussion across the country about closing ranks and promoting efforts to buy Canadian goods and services, or at least avoiding American products, Dalio said there hasn’t been guidance from the province yet on how municipalities can be part of a unified effort and one option for the city is to wait until that guidance is issued.
Dalio said it’s likely better to support Canadian businesses with lower-value purchases below the thresholds of various trade agreements “and then direct administration to use their judgement on a case-by-case basis where we could measure those impacts to the cost and efficiency in our purchases.”
Coun. Brian Skakun said he thinks Prince George can do two things at a high level: Put out a press release encouraging residents to buy local and work with partnering organizations like the Union of BC Municipalities and the Prince George Chamber of Commerce to work on other initiatives.
Coun. Cori Ramsay said she thought Skakun’s ideas were good and added that it might be a good opportunity to include information for how residents can identify and purchase goods produced in Canada.
Ramsay, who serves as first vice-president of the UBCM, said the organization’s executive as well as mayors and regional district board chairs had a roundtable call with the province scheduled for March 11 to discuss the tariffs.
Last week, she said she also participated in a Federation of Canadian Municipalities’ BC Caucus meeting about the tariffs, where members discussed the Canoe Procurement Group of Canada, which is free to join and offers access to bidding opportunities at preferred rates across the country.
Ramsay said council needs to discuss what the impacts will be if the trade war causes local businesses to shut down, which will have the knock-on effect of reducing the city’s tax revenue.
She said this has been seen before in the north when Canfor shut down or curtailed its facilities. Already, she said she’s heard of job losses in BC because of the tariffs.
Coun. Garth Frizzell said it was a relief to hear that municipalities are not subject to any trade agreements with the U.S.
He referenced the tolls on trucks going to Alaska through BC that Premier David Eby has threatened.
Frizzell said Prince George will be hurt more than other municipalities in the province if truck traffic to Alaska is reduced and the city should be in touch with the premier to ask for more specifics and whether money collected through the tolls will be distributed this way.
The councillor asked what it would take for the city to determine its dependency on U.S. products. Dalio said in his limited conversations with infrastructure department heads and procurement staff, it doesn’t sound like Prince George is much dependent on U.S. supplies sold on U.S. soil.
However, for a complete list of procurements, including those at small enough thresholds that they don’t require sign off from higher levels of management or from council, Dalio said he would need to speak with managers from every department during what is the busiest time of year for procurements.
Dalio said the task would take “a great deal of time” unless staff were pulled from their regular duties to get it done.
“A great deal of time, but it might be time that we invest well,” Frizzell said. “That’s the issue before us.”
Where other councillors suggested a simpler “lunch-and-learn” on procurement issues, Frizzell said he felt the situation warranted greater discussion on the topic to go over policy alternatives and hard choices.
He put forward a motion calling administration to prepare a report outlining possible next steps in adjusting procurement policies to adapt to tariff situation and summarize the results of the UBCM meeting with the province.
During a lengthy discussion on what Frizzell’s motion would entail, Dalio reiterated that he felt every city department should be consulted about the possible implications of eliminating American purchases.
“We would need to figure out what exceptions that we really need to have to operate properly,” Dalio said.
Coun. Trudy Klassen was the lone councillor to vote against the motion, saying that dealing with the trade war was better left up to the city’s provincial and federal counterparts.
“This might make us feel good, but I don’t think it’s the best use of our time,” she said.
“There may be examples all over the city. Maybe there’s an aquatics pump that we can only get from a U.S. supplier. Are we going to shut down a pool in order to not have that part? There are some potentially very large impacts that could come out of making a blanket resolution. In order to find the exceptions, I would need to pull everybody off their work plans for a while to do that.”
Coun. Kyle Sampson put forward a motion calling for administration to prepare a report on how the city could adopt social procurement practices.
Earlier in the meeting, Dalio explained to council that some jurisdictions consider social goals projects will achieve on top of the price and quality aspects when considering bids. Prince George does not currently include these considerations in its procurement.
“I’m not trying, from my perspective, to impact America as much as I’m trying to support Canada, support Canadian businesses, local businesses and giving them an advantage in a time where there is a lot of uncertainty,” Sampson said.
He said he would like to see procurement practices give some extra consideration to projects that will invest in the community without unduly tipping the scales in their favour.
Dalio said in preparing a report in response to Sampson’s motion, he would likely suggest that social factors account for no more than five to 10 per cent of a score given to a bid. Sampson said he was happy to let staff determine what percentage was appropriate for the situation.
As beneficial as it might seem, Klassen said she worried about unintentional consequences of social procurement practices, especially when it comes to costs.
Ramsay said that with so many jurisdictions adopting social procurement practices and businesses looking at their environmental, social and governance impacts, she worried that the city might start to miss out on grant opportunities if it didn’t look into the opportunities.
For example, she said the city’s district energy system received a lot of grants because it helped limit the city’s impacts on climate change.
The motion passed seven to two with Klassen and Mayor Simon Yu voting against.
Following up on Skakun’s points from earlier, Coun. Ron Polillo put forward a motion directing administration to create a “buy local” campaign for its communications and social media channels. This motion passed unanimously.
Ramsay put forward a final motion calling for administration to host a lunch and learn on procurement and tariffs for council with the economic development department.
Sampson suggested that this meeting take place after the close of the Support PG Business Survey, which launched earlier that same day.
That survey is a partnership between the city, the Prince George Chamber of Commerce, Community Futures Fraser-Fort George, BC Northern Real Estate Board, Downtown Prince George, Tourism Prince George, CHBA Northern BC and the Northern Regional Constriction Association to help understand the needs, challenges and opportunities for local businesses. Responses to that survey close March 31.
The motion passed with only Klassen opposed.
