Canada considers export tax on high-demand exports to U.S. if Trump imposes 25% tariff
The Canadian government is considering an export tax on high-demand exports to the United States such as oil, uranium and potash as a means of dissuading U.S. president-elect Donald Trump from proceeding with threatened steep tariffs on goods from Canada, a senior government official said.
Canada is still mapping out a strategy for how to respond to Mr. Trump’s promised 25-per-cent tariffs, the official said, and an export tax on strategic commodities is on the table. The official emphasized that a number of ideas are still being considered and Ottawa is not close to selecting which to adopt.
The Globe is not identifying the source because they were not authorized to discuss these matters publicly.
Alberta Premier Danielle Smith said an export tax would be crushing and “a breaking point” for her province.
“I will tell you what will happen if they do that: They will have a national-unity crisis at the same time as they have a crisis with our biggest relationship with the Americans,” Ms. Smith said in an interview Thursday.
Prime Minister Justin Trudeau has talked about putting tariffs on American imports, but not this, Ms. Smith said. “It would create a national-unity crisis. He cannot do that.”
Saskatchewan Premier Scott Moe, whose province exports petroleum, uranium and potash, also strongly objected to such export taxes in a post on X Thursday. He said they would be a self-destructive response to the U.S. tariffs and his province would be particularly hard hit.
“Export taxes have never even been mentioned by the Prime Minister on either of the calls with premiers to discuss the U.S. tariff threat,” he wrote.
“If they are under consideration, that would be a complete betrayal by the Trudeau government of the team approach they have been advocating and a complete betrayal of Canadians,” Mr. Moe said.
The reactions of Ms. Smith and Mr. Moe were two of several divides that suggest cracks are forming in the Team Canada approach as the country works to find a way to respond to the Trump tariffs.
Leaders of three major energy-exporting provinces said they would be unwilling to follow Ontario in blocking shipments of oil, gas or power to the United States in retaliation for tariffs.
Ontario Premier Doug Ford said Wednesday that Ontario would be prepared to suspend electricity exports to U.S. customers if Mr. Trump’s incoming administration proceeds with tariffs.
Ms. Smith responded Thursday that “under no circumstances will Alberta agree to cut off oil and gas exports.
“I don’t support tariffs on Canadian goods, and I don’t support tariffs on U.S. goods, because all it does is make life more expensive for everyday Canadians and everyday Americans.”
Ms. Smith said she believes Americans should be persuaded that Mr. Trump’s tariffs would drive up the cost of living for them.
The U.S. president-elect has shown no signs of backing off a Nov. 25 announcement that he plans to impose 25-per-cent tariffs on all Canadian and Mexican imports unless both countries stop illegal migration and smuggling of the opioid fentanyl into U.S. territory.
Quebec Premier François Legault, and Newfoundland and Labrador Premier Andrew Furey, speaking at a joint news conference Thursday, also said that stopping energy exports is not on the table
Mr. Legault said Prime Minister Justin Trudeau can avert a trade war by securing the border as Mr. Trump has requested.
“I had the chance to meet with Mr. Trump last weekend in Paris, and he told me very clearly that we can avoid those tariffs if we do what needs to be done with the borders,” Mr. Legault said.
“So I think the best choice right now for Mr. Trudeau is to table a plan, with money” to increase border security, he said. “I prefer that then starting a war and stopping sending energy to United States,” Mr. Legault said.
Speaking to reporters Thursday, Mr. Ford said he was only speaking for his province when he vowed to cut off energy exports to the United States, saying the measure would only be a last resort.
Mr. Ford, speaking a day after premiers met with Mr. Trudeau to talk about border security and a plan to combat Mr. Trump’s tariff vow, told reporters he hopes he won’t have to retaliate against the U.S.
“It’s a last resort. We power 1.5 million homes, and if they put on tariffs, it’s going to be unaffordable for Americans to buy electricity, just like if we put tariffs on the 4.3 million barrels of oil that Alberta’s shipping down to the U.S.,” Mr. Ford told reporters at Queen’s Park.
“I don’t think president-elect Trump wants that to happen … we’re sending a message to the U.S.: You come and attack Ontario, you attack livelihoods of people of Ontario and Canadians, we’re going to use every tool in our toolbox to defend Ontarians and Canadians across the border. And let’s hope that never comes to that point.”
Ontario exported 13.9 million megawatt-hours of electricity to the United States in 2023, about 13 per cent of Canada’s overall power exports to American customers that year, according to Statistics Canada.
A senior Ontario government official said Ontario is also considering restricting the province’s liquor control board from buying American-made alcohol, as well as restricting exports of critical minerals.
The Globe is not identifying the official as they are not authorized to speak publicly about internal discussions. No decisions have been made, the official said.
Mr. Trump on Thursday had little to say about Mr. Ford’s threat to retaliate should the U.S. impose tariffs.
“That’s okay if he that does that. That’s fine,” Mr. Trump told CNBC when asked about Mr. Ford’s remarks.
“The United States is subsidizing Canada and we shouldn’t have to do that,” Mr. Trump added. “And we have a great relationship. I have so many friends in Canada but we shouldn’t have to subsidize a country. We’re subsidizing more than $100-billion a year. We shouldn’t have to be doing that.”
The CNBC reporter said off camera Mr. Trump told him they hope they can work something out with Canada.
Mr. Ford told reporters he has plans to speak with the governors of New York State and Michigan, two states, along with Minnesota, he singled out as needing Ontario power.
“That’s the last thing we want to do. Would we do it? Let’s wait and see,” Mr. Ford said.
Mr. Legault also said this week he wants Canada to conduct criminal background checks on all foreigners who need visas to enter this country. And, he said, Ottawa must reinstate a rule requiring these travellers to show a departing ticket from Canada and enough assets to support their visit to Canada.
Mr. Ford said Thursday that already happens in jurisdictions around the world. “We have to control the immigration coming in.”
Mr. Ford, who chairs the Council of the Federation, said he will discuss further plans with fellow premiers when they meet in Toronto for two days next week.
“I was speaking for Ontario yesterday, the options that we have, the tools that we have in our toolbox. We’ll be meeting with the premiers on Sunday and Monday, going into Tuesday. That’s going to be up to each jurisdiction,” he said.
Mr. Ford said provinces are drawing up lists of proposed retaliatory measures for Ottawa.
“We can’t just roll over as we’re being under attack and hurting our families and our jobs. We just want to send a message. When it comes to the U.S., I want to send them more electricity, I want to send them critical minerals. I want to make sure that we have fair trade going back and forth across the border,” he said.
British Columbia Premier David Eby said Thursday his province would reluctantly support retaliatory tariffs on the U.S. if necessary, even though the ban on energy sales proposed by Mr. Ford could cost his province billions.
The province’s electricity trades with Western states brought in $1-billion to the Crown corporation BC Hydro last year, and B.C. natural gas sales across the border are worth a similar amount, he said Thursday during a news conference on an unrelated topic in Langley.
“Nothing is off the table,” he said.
This article was first reported by The Globe and Mail
