Trade war fuelling spike in city costs

A trade war between the U.S. and Canada could cost the City of Winnipeg millions of dollars more than was anticipated during the budget process for this year’s expenditures and beyond.

The city is at risk of paying up to $4.7 million more for $913.7 million of upcoming construction expenses by the end of 2027, due to the effects of tariffs and counter-tariffs.

The affected projects include part of the massive $3.1-billion North End sewage treatment plant upgrade that is now underway, Paul Beckta, a senior city economist, said during a Monday finance committee meeting.

However, Beckta said those financial concerns will become a reality only if the city keeps the same suppliers and current tariff levels remain in place.

Tracy Graham, the city’s chief financial officer, said officials are working to avoid as much of the extra costs as they can.

“That (figure is) a maximum exposure but we’re going to still try and not spend that,” said Graham.

For example, Winnipeg procurement documents require contractors to look at alternative sources of supplies if their current supplier is a U.S.-based company that would result in a higher price, she said.

“We’re requiring them to look at that as part of the overall cost of their contract so that they can keep it in line with (the) budget,” said Graham.

New measures within Buy Manitoba/ Buy Canada policies are also expected from the province soon. Graham said that could allow the city to award points specifically to local companies in its tendering practices — to make them more likely to win contracts — without violating trade rules.

Meanwhile, fuel prices soared notably higher in recent months as a result of the war in Iran and other international pressures, raising city costs.

Winnipeg Transit now expects to face approximately $4.8 million of added 2026 expenses.

“The average price that we paid at the end of June was $1.36 (per litre of diesel fuel). The average price we paid for July was $1.45. In August, $1.76 and last week we paid $1.88…. So, due to the uncertainty with respect to recent global events, fuel prices have been, and continue to be, very volatile and are difficult to forecast,” said Laurie Fisher, Transit’s finance manager.

While bulk-buying contracts allow Transit to pay lower prices than what the average driver is charged at the pump, its rates remain well above prices used to estimate the 2026 budget, she said.

The bus service expects to cover the initial round of added costs through salary and benefit savings, along with retained earnings, according to a finance report.

However, additional spending may be needed if prices don’t ease up over the next few months.

“If rates stay at these extremely high levels for the remainder the year, we’ll likely… need to come back with an additional over-expenditure report in December,” said Fisher.

Coun. Jeff Browaty, chairman of finance, said Transit cautiously budgets for fuel but any reasonable cost buffer wouldn’t cover such steep price increases.

“This year, diesel prices are blowing through that. So, it’s certainly a risk…. It’s just been going up consistently,” said Browaty (North Kildonan).

joyanne.pursaga@freepress.mb.ca

X: @joyanne_pursaga