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(Bloomberg) — A strike at Pacific coast ports threatens to disrupt millions of dollars of trade and add inflationary pressures to the Canadian economy.

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The International Longshore and Warehouse Union representing more than 7,000 dockworkers went on strike Saturday morning after federal-mediated negotiations overnight failed.

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The strike is poised to affect activities at maritime hubs in British Columbia, including the Port of Vancouver and Port of Prince Rupert, the country’s No. 1 and No. 3 busiest. These ports are vital to exports of natural resources and imports of raw materials and food products.

The stoppage shows workers are unbending in their demand to recoup purchasing power lost over the past two years. The unrest is adding to wage pressures and disrupting supply chains, driving up costs for businesses and prices for consumers, while potentially stalling progress in cooling inflation.

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A quarter of Canada’s total traded goods flow through these western ports, representing more than C$800 million ($604 million) worth of cargo each day. The disruption will have a knock-on effect to the rest of the economy, Robin Guy, vice president of the Canadian Chamber of Commerce, said in an interview. 

Read more: Western Canada Dockworkers Plan Strike July 1 as Pay Talks Fail

“Every piece of Canadian industry if they’re moving products, chances are it’s going through the west,” Guy said. “It’s going to fuel inflation, which is also going to make it harder on the economy and the pocketbooks of everyday Canadians.”

The longer the work stoppage drags on, the more impact it would have on the economy, according to Omar Allam, a global trade adviser and former Canadian trade official. In 2021, a strike at the Port of Montreal, Canada’s second biggest, led to a loss of up to C$25 million per day, and this strike would have a bigger impact due to the scale of disruptions. 

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“There’s a lot of stake here, and there’s a lot of leverage that dockworkers have at the negotiating table,” Allam said. “History shows that these negotiations are frequently difficult, and it includes service disruptions that could really impact supply chains and delivery schedule.” 

The union announced their intention to strike earlier this week after talks with employers for a new contract failed, saying it “has run out of options at the bargaining table.”  

The ILWU and the British Columbia Maritime Employers Association — which represents about 49 waterfront companies and terminal operators — have been in talks since February to renew a collective agreement to replace the old one that expired March 31.

In response to the union’s announcement, the association said “we remain ready to re-engage with our labor partners through the federal mediation process, with the desire of reaching a fair and balanced deal at the table that keeps our ports stable and goods flowing for Canadians.”

—With assistance from Robert Tuttle.

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