Canada is weighing export restrictions as possible countermeasures to the looming threat of tariffs from the incoming U.S. administration. Foreign Affairs Minister Mélanie Joly stated, "What I can tell you is everything is on the table," during an interview on CTV's Question Period. This came amid discussions with provincial leaders on how to tackle the tariff threat posed by President-elect Donald Trump.
The remarks set off immediate reactions, especially from Alberta Premier Danielle Smith, who declared, "Alberta will not support a tariff war with our largest trading partner and closest ally." Smith's position suggests resistance against any drastic measures affecting energy exports, as Alberta aims to bolster its oil production to strengthen its economic ties with the U.S. This position reflects the broader concerns among many Canadian leaders about the potential ramifications of trade hostilities.
Energy products represent Canada’s largest export to the U.S.—around 30% of all goods exported. The country sent an impressive $133 billion worth of crude oil and bitumen to America last year alone, alongside $13 billion worth of natural gas. The economic ripple effects of tariff-induced tensions could severely disrupt this flow, impacting thousands of jobs across the Midwest, as highlighted by Prime Minister Justin Trudeau: "Most of the Midwestern refineries are built for heavy crude. That almost entirelycomes from Canada."
During Joly’s discussions with provincial premiers scheduled for January 11, 2023, the focus will be on collectively determining how Canada should respond if Trump follows through with his proposed 25% tariffs on Canadian imports. Joly emphasized, "It is important to understand the threat is real and we’re acting on it." This assertive stance suggests preparation for diplomatic negotiations as well as potential retaliation.
The debate around energy export restrictions revives ideas proposed by Ontario Premier Doug Ford, who suggested using export taxes to raise costs for American buyers. Yet, these notions have met with disagreement from other provincial leaders. Ford has since softened his remarks, advocating for closer economic integration within North America instead.
British Columbia’s Premier David Eby expressed support for targeted export bans on key commodities. He stressed the importance of leveraging Canada’s energy resources significantly, underscoring the unique position British Columbia holds concerning the supply of certain minerals to the U.S. "If you don’t get it from us, then you don’t get it at all," he warned, alluding to the growing competition from global restrictions, such as those imposed by China on certain minerals.
Meanwhile, Newfoundland Premier Andrew Furey argued for caution. Citing the significance of Canada's energy exports to the U.S. economy, he drew on chess strategies: "Using a chess analogy, I see energy as the queen and to bring out the queen too early would be a mistake."
This divergence among provincial leaders demonstrates potential challenges as Canada navigates its response to the impending tariff threats. At the crux of the debate lies the need for unity among provinces, as Furey articulated, "If we’re not unified, we can’t be strategic." With provincial governments gearing up for negotiations, future summit discussions are aimed at forging consensus—both to appease American lawmakers and to present a unified stance against potential tariffs.
Looking forward, Canada is preparing for diplomatic engagements, with Joly set to visit Washington to discuss these matters with U.S. lawmakers. There’s mutual recognition among leaders like Furey about the negatives of entering punitive trade measures. Joly's emphasis on strength and unity points to the current climate’s volatility and the necessity for Canadian leaders to present firmly and cohesively.
Whatever strategies are adopted, the overarching sentiment among Canadian officials is to protect the economic interests of their citizens and preserve the historical trading relationships cultivated over decades. The stakes are high, as both American consumers and Canadian producers stand to lose from any drastic escalations of trade hostilities.