‘Nothing off the table’ in Canada’s response to US tariff threat
Canadian political leaders say “nothing is impossible” just days before potential 25% U.S. tariffs take effect.
But when it comes to whether energy supplies should be used as a tool in a potential tariff war with the United States, “Team Canada” is under pressure.
President-elect Donald Trump, who took office on Monday, has threatened to impose immediate taxes on Canadian goods to force the country to crack down on illegal immigration and drug smuggling into the United States.
Canadian Prime Minister Justin Trudeau met with provincial and territorial premiers on Wednesday to discuss the country’s coordinated response.
“Nothing is impossible,” Trudeau said at a news conference with the prime minister at the end of a day of meetings.
“The consensus is that we must address the challenges we face and that the burden is shared across the country.”
“We will defend Canada and we will protect Canadians,” he added.
The Prime Minister also said affected industries would “absolutely” be supported if tariffs were implemented.
About 75% of Canada’s exports go to the United States, and economists say these tariffs would be devastating for the country.
Canada is preparing a series of countermeasures if the Trump administration imposes blanket 25% tariffs on all goods or takes more targeted measures.
Canadian lawmakers have been lobbying their U.S. counterparts in recent weeks to avoid tariffs, including personal visit to trump Mar-a-Lago Resort In Florida.
Ottawa has also pledged C$1.3 billion ($900 million; £700 million) to implement new security measures along the country’s nearly 9,000 kilometers (6,000 miles) border with the United States to allay some of Trump’s concerns.
But there are growing concerns that tariffs – at least in some form – are inevitable.
Trump has long been a supporter of trade tariffs, calling them the “greatest invention ever.”
They are a central part of his economic vision. He sees it as a way to grow the U.S. economy, protect jobs and raise taxes.
Canadian officials say they will harm the U.S. economy, increase inflation for U.S. consumers — including by raising gasoline prices — and discourage investment.
They also warned that tariffs could harm national security given that U.S. ally Canada is a major source of energy and critical minerals.
While there has been a push for a unified approach to deal with the threat, the rifts in the alliance were evident on Wednesday.
Alberta Premier Danielle Smith did not sign the joint statement released after the meeting, which she actually attended.
She said on social media that the oil-rich province would not agree to impose export tariffs or ban exports of energy or other products.
“We will take all necessary actions to protect Albertans’ livelihoods from destructive federal policies like this,” she said.
Trudeau and the governors of Ontario, Quebec and Newfoundland are willing to impose counter-tariffs on energy or cut off energy exports to the United States.
“I think energy is Canada’s queen in this chess game,” Newfoundland and Labrador Premier Andrew Furey said before the meeting.
“We don’t need to expose our queen too early. The opposition does need to know that the queen exists, but they don’t need to know what we did to the queen.”
U.S. refineries import about 40% of their crude oil, the vast majority of which comes from Canada.
It also supplies natural gas and electricity to the United States.
Asked about Smith’s response, Trudeau said: “We are united and strong action must be taken.”
according to to various analyzeIf a 25% blanket tariff were imposed on Canadian goods, Canada’s GDP could take a hit of between 1.8% and 3.38% and between 2.6% and 5.6%, depending on how and whether Canada retaliates.
These reports said that US GDP will decrease by 0.9% to 1.6%.
Drew Fagan, a professor at the University of Toronto’s Munk School of Global Affairs and Public Policy, said knowing the response will be disproportionately painful “means we (Canada) have to respond smarter, and that’s tricky.”
“It’s hard to strategize for a government that tends to think more improvisationally.”
Ontario Premier Doug Ford said the province, which is a core part of the country’s auto industry, could lose up to 500,000 jobs under the current proposed tariffs.
According to financial projections, Alberta could lose 50,000 jobs.
The expected tariff war comes as Canada faces domestic political challenges.
Trudeau will step down as prime minister once the ruling Liberal Party elects a new leader in March.
He said on Wednesday he would not run in the next election.
Canada is holding elections this year, possibly as early as this spring.
Additional reporting by Nadine Yousif in Toronto.
