Empowering Strategic Planning Amid Tariff Uncertainty for Canadian Municipalities

The problem: Uncertainty in Global Trade Policy Poses Hidden Budget Risks for Ontario Municipalities

The Association of Municipalities of Ontario (AMO) needed to understand how recent US-imposed steel and aluminium tariffs—and the risk of future tariff escalations—could affect local capital investment. Given municipalities’ heavy reliance on steel and aluminium for infrastructure, and with procurement cycles often planned years ahead, tariff volatility introduced a significant budgeting risk and decision-making blind spot.

The challenge: Forecasting the Local Impact of Global Tariff Volatility Across Diverse Municipal Contexts

Municipalities vary widely in population size, infrastructure priorities, and budget capacity. The challenge was to forecast and model the economic consequences of multiple tariff scenarios in a way that was both credible and relevant across Ontario’s urban and rural councils—while accounting for future inflation, import cost pass-throughs, and potential policy shifts.

The solution: Data-Driven Scenario Forecasting Supports Smarter Capital Planning and Advocacy

Oxford Economics Australia developed and applied a set of three forward-looking economic scenarios—Baseline, Extended Tariffs, and Escalated Tariffs—to simulate how evolving trade policies would affect Canadian steel and aluminium import prices, infrastructure costs, and ultimately, municipal capital expenditure.

The deliverables included:

• Forecast models assessing capital expenditure impact through 2030.
• Price inflation projections for steel- and aluminium-intensive projects.
• Municipality-level fiscal planning insights, enabling local governments to quantify the cost of tariff risks.
• Economic interpretation of the global supply chain dynamics and pass-through to local budgets.

Impact for AMO and Municipalities:
The insights enabled AMO and its members to engage more confidently with stakeholders, adjust procurement strategies, and advocate for federal support or policy clarity—reducing the risk of over- or under-budgeting critical infrastructure work.