COMMENTARY: Here’s How to Attract Investment to Newfoundland Despite Trump’s Tariffs – Fraser Institute

By Alex Whalen

In the latest salvo in his trade war, President Trump has slapped a 50 per cent tariff on hundreds of Canadian export goods across many sectors of the Canadian economy. Prime Minister Carney has promised to retaliate with his own set of tariffs. While this trade war has caused economic uncertainty to reach monumental heights, one thing is certain—it’s bad for investment.

And in Newfoundland and Labrador, this could compound an existing problem. For workers seeking higher wages or businesses looking to grow, a province’s investment climate is crucial. Indeed, business investment remains the backbone of growth, providing workers the tools, equipment and intellectual property they need to be more productive, which in turn drives wage growth and prosperity.

Even before Trump’s latest tariffs, Newfoundland and Labrador’s investment climate was tepid.

For example, between 2018 and 2025, among the provinces, Newfoundland and Labrador posted the second-worst growth rate of “non-residential capital stock”—a technical term for the level of business investment in the economy. This is a sharp contrast to the 2014 to 2018 period when the province led Canada in investment, or the 1990 to 2014 period when it ranked third.

Why is this happening?

The data largely predate Trump’s trade war, so it’s largely a home-grown problem. Oil and gas remains Newfoundland and Labrador’s largest industry and largest driver of investment, and this sector was under a full-blown regulatory assault from the Trudeau government during most of this period (2018-2025). Conversely, previous periods of robust growth aligned with an expansion in the industry.

Yet the bleak results aren’t limited to oil and gas. Three of the province’s next largest industries—mining, transportation and utilities—also experienced declines in investment in recent years. While we can attribute some of this slowdown to the completion of Muskrat Falls (following completion of this massive capital expenditure, a large chunk of spending collapsed), the overall picture remains one of slow or negative investment growth across numerous industries.

But there’s good news. Policymakers can help improve the investment climate by enacting better policies. When surveyed, investors consistently point to the province’s regulatory burden as a barrier to investment. While businesses of all sizes make investments, the largest drivers of investment are often large corporations allocating capital on a global basis. This means that Newfoundland and Labrador must have competitive policies when it comes to regulation and permit times, otherwise capital will flow elsewhere.

Thankfully, the province has many billions of dollars in untapped oil and natural gas reserves, and over the past five years investors in the mining industry have (on average) ranked the province among the highest globally for mining potential.

These are uncertain times. And some things, including Trump’s tariffs, are impossible to control. But if the Carney and Wakeham governments want to help bring more jobs and higher wages to Newfoundland and Labrador, they must help make the province more attractive to investment in all industries.

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