The Premier of Ontario, Doug Ford, ramped up tensions between Canada and the United States on Wednesday by threatening to cut off energy supplies if President-elect Donald Trump follows through on his proposed tariffs on Canadian goods. Ford’s remarks during a press conference were underscored by concerns over the fallout of trade conflicts looming between the two nations.
"We will go to the full extent depending on how far this goes. We will go to the extent of cutting off their energy, going down to Michigan, going down to New York State, and over to Wisconsin," Ford asserted, emphasizing his commitment to protecting Ontarians and Canadians as the largest province.
This standoff emerges as Trump has proposed sweeping tariffs of up to 25% on all imports from Canada and Mexico. According to various analysts, the potential trade war could signal dire consequences for both economies. Patrick De Haan, head of petroleum analysis at GasBuddy, indicated U.S. gas prices could spike significantly if tariffs are enacted, predicting increases of up to 70 cents per gallon shortly after.
Canada has historically been the United States' largest source of energy imports, providing not only natural gas but also about 20% of the crude oil consumed by its neighbor to the south. Ford addressed the reality of this interdependence by saying, "Canadians get hurt, but I can assure you one thing: the Americans are going to feel the pain as well, and isn’t it unfortunate?" Experts estimate Ontario supplied electricity to approximately 1.5 million U.S. homes and is also a major power exporter to states like Michigan and Minnesota.
"This fight is 100% coming on Jan. 20 or Jan. 21," Ford warned, referencing Trump’s inauguration date, indicating the likely escalation of tensions. Canada’s federal minister of finance, alongside provincial premiers, are expected to compile lists of items for which retaliatory tariffs could be imposed against the U.S.
Trump's tariffs initially stem from his claims of needing to curb the flow of drugs and unauthorized migration coming from Canada and Mexico. To address these issues preemptively, the Canadian government considered investing over $700 million to bolster its border protection capabilities, including increasing personnel and acquiring advanced equipment like helicopters and drones.
Past instances of punitive tariffs have also been contentious, as Trump had imposed tariffs on Canadian steel and aluminum, leading to retaliatory duties on U.S. products such as whiskey and yogurt. Analysts warn the fallout from new U.S. tariffs could deliver considerable economic blows to Canadian industries heavily reliant on cross-border trade, such as automotive and energy, with projections of GDP declines and job losses. Michael Davenport, with Oxford Economics, forecasts tariffs could push Canada's economy toward recession by 2025, with unemployment potentially rising to 7.9% due to significant layoffs.
Ford's tough stance reflected sentiments echoing throughout Canada. His threat to cut off energy supplies mirrors broader sentiments about the necessity of retaliatory measures. "Some premiers proactively identified products their provinces produce and export to the United States and which the U.S. relies on, and which should be considered as part of the Canadian response. This included some minerals and metals," he mentioned.
On the political front, Trudeau sought to engage Trump directly, holding meetings aimed at establishing some level of diplomacy amid growing fears of trade strife. Following their meeting at Mar-a-Lago, Trump remarked, "The United States is subsidizing Canada, and we shouldn't have to do this." Despite affirming strong personal ties with Canadians, he stressed economic corrections were necessary.
While Ford's rhetoric has undeniably raised the stakes, experts caution against making unilateral decisions within this framework. University of Toronto political science professor Nelson Wiseman noted, "I do not believe Ontario could unilaterally stop electricity exports to the U.S. without Ottawa’s approval." Such interdependencies highlight the precariousness of the situation, with both countries poised to endure repercussions stemming from protectionist policies.
Overall, the situation remains fluid as the realities of interconnected economies loom large, pushing both Canada and the U.S. to reckon with the consequences of their trade decisions.
