Canada’s political leaders said “nothing is off the table” when it comes to responding to the possibility of 25 per cent U.S. tariffs, days before they take effect.
But there are tensions on “Team Canada” over whether energy supplies should be a lever in a potential tariff war with the United States.
President-elect Donald Trump, who takes 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.
On Wednesday, Canadian Prime Minister Justin Trudeau met with provincial and territorial premiers to discuss the country’s coordinated response.
“Nothing is off the table,” Trudeau said at a news conference with premiers after a day of talks.
“What we agreed on is that we have to respond to the challenges we face, and that the burden will be shared across the country.”
“We will stand up for Canada and protect Canadians,” he added.
The Prime Minister also said there would be “absolutely” support for affected sectors if tariffs were to materialize.
About 75 per cent of Canada’s exports go to the United States, and economists say the tariffs would be devastating for the country.
Canada is preparing a number of countermeasures in case the Trump administration imposes a flat 25% tariff on all goods or pursues a more targeted approach.
Canadian lawmakers have been lobbying U.S. lawmakers in recent weeks to avoid tariffs, including a personal visit to Trump’s Mar-a-Lago resort in Florida.
Ottawa also pledged C$1.3 billion ($900 million, 7 billion) for sweeping new security measures along its nearly 9,000-kilometre (6,000-mile) long border with the United States, in a bid to allay some of President Trump’s concerns. billion pounds).
But there are growing concerns that at least some form of tariffs is inevitable.
President Trump has long supported trade tariffs, calling them “the greatest thing ever invented.”
They are a central part of his economic vision. He sees these as a way to grow the U.S. economy, protect jobs and increase tax revenue.
Canadian officials argue that these policies will weaken the U.S. economy, increase inflation for U.S. consumers, including raising prices at gas pumps, and discourage investment.
They also warn that tariffs could undermine national security, given that Canada, a U.S. ally, is an important source of energy and critical minerals.
There had been calls for a unified approach to the threat, but Wednesday revealed fissures within the coalition.
Alberta Premier Daniel Smith did not sign the joint statement released after the meeting, which he attended virtually.
He said on social media that oil-rich states would not agree to export tariffs or bans on energy and other products.
“We will take all necessary steps to protect the lives of Albertans from these destructive federal policies,” she said.
Prime Minister Trudeau and the premiers of Ontario, Quebec and Newfoundland are open to imposing counter-tariffs on energy or cutting off energy exports to the United States.
“I think Canada’s queen in this game of chess is energy,” Newfoundland and Labrador Premier Andrew Furey said ahead of the meeting.
“We don’t need to expose the queen too early. The opposition needs to know that she exists, but they don’t need to know what we’re doing to her.”
About 40% of the crude oil that passes through U.S. refineries is imported, with the majority coming from Canada.
It also supplies natural gas and electricity to the United States.
Asked about Smith’s response, Prime Minister Trudeau said: “We are all united in the fact that we must act decisively.”
According to various analyses, if a 25% blanket tariff were imposed on Canadian products, Canada’s GDP would increase by between 1.8% and 3.38%, and between 2.6% and 2.6%, depending on how and whether Canada retaliates. It could take a 5.6% hit.
According to those reports, US GDP will be squeezed between 0.9% and 1.6%.
Knowing that the pain of responding is disproportionate means “we (Canada) have to be smarter about how we respond, and that’s difficult,” says Munk International Affairs, University of Toronto.・Professor Drew Fagan of the School of Public Policy said.
“It’s hard to be strategic in an administration like this, where thinking is often off the rails.”
Ontario Premier Doug Ford has suggested that up to 500,000 jobs could be lost under the current proposed tariffs in the province, which is at the heart of the country’s auto sector.
Financial projections suggest 50,000 jobs could be lost in Alberta.
The expected tariff battle comes as Canada faces political challenges at home.
Prime Minister Trudeau will step down as prime minister once the ruling Liberal Party elects a new leader in March.
He said Wednesday he would not run in the next election.
Canada is scheduled to hold an election this year, perhaps as early as this spring.
With additional reporting by Nadine Yousif in Toronto.
