Trade war looms

TORONTO (AP):

Canada’s most populous province may bar American-made alcohol, in addition to restricting electricity exports to Michigan, New York and Minnesota if US President-elect Donald Trump imposes sweeping tariffs on all Canadian products, a senior official said last Thursday.

The official in Ontario Premier Doug Ford’s government said that it’s contemplating restricting Ontario’s liquor control board from buying American-made alcohol.

Ontario is also considering restricting exports of critical minerals required for electric vehicle batteries and preventing US-based companies from the government’s procurement process, the official said on condition on anonymity, because the functionary wasn’t authorised to speak publicly about the potential measures.

Ford confirmed on Wednesday evening that Ontario is contemplating restricting electricity exports to Michigan, New York State and Minnesota. He reiterated that on Thursday and said it would make electricity unaffordable for Americans.

“It’s a last resort,” Ford said. “I don’t think President-elect Trump wants that to happen. We’re sending a message to the US. If you come and attack Ontario, you attack livelihoods of people in Ontario and Canadians, we are going to use every tool in our toolbox to defend Ontarians and Canadians. Let’s hope it never comes to that.”

Trump has threatened to impose a 25 per cent tax on all products entering the United States from Canada and Mexico unless they stem the flow of migrants and drugs.

Ontario powered 1.5 million homes in the US in 2023 and is a major exporter of electricity to Michigan, Minnesota and New York.

“That’s OK if he does that. That’s fine,” Trump told CNBC when asked about Ford’s remarks on the floor of the New York Stock Exchange.

“The United States is subsidising Canada and we shouldn’t have to do that,” Trump said. “And we have a great relationship. I have so many friends in Canada, but we shouldn’t have to subsidise a country. We’re subsidising more than a $100 billion a year. We shouldn’t have to be doing that.”

The CNBC reporter said off camera that Trump told him that they hope they can work something out with Canada.

The premier of the oil-rich Canadian province of Alberta ruled out cutting off oil exports.

“Under no circumstances will Alberta agree to cut off oil and gas exports,” Alberta Premier Danielle Smith said. “Instead, we’re taking a diplomatic approach and we’re meeting with our allies in the US. We’re making the case for Alberta oil and gas to be part of the solution to energy affordability and energy security.”

Canada supplies more oil to the US than any other country, nearly 4.5 million barrels a day. About 60 per cent of US crude oil imports are from Canada and a fifth of the crude refined in the US comes from Canada.

“If you put a 25 per cent tariff on oil from Alberta, that increases every gallon of gasolene by one dollar,” Ford said.

About 85 per cent of US electricity imports come from Canada as well. Canada also has 34 critical minerals and metals the Pentagon is eager for.

Nearly CDN$3.6 billion (US$2.7 billion) worth of goods and services cross the border each day. Canada is the top export destination for 36 US states.

Canada has promised more border security spending to address Trump’s border concerns. Ford said that will include more border and police officers, as well as drones and sniffer dogs.

Public Safety Minister Dominic LeBlanc, who along with Prime Minister Justin Trudeau recently had dinner with Trump at Mar-a-Lago, his private club in Florida, said they plan to share details of those border plans with the incoming Trump administration in the coming days.

Alberta’s government is creating a new sheriff patrol unit to shore up security at the border. It will be supported by about 50 sheriffs, 10 cold-weather surveillance drones and four drug-detection dogs. Alberta Public Safety Minister Mike Ellis said a two-kilometre (1.2-mile) deep zone along the border with Montana will be deemed critical infrastructure, so sheriffs can arrest, without a warrant, anyone found attempting to cross illegally or trafficking illegal drugs or weapons.

At the Mar-a-Lago dinner, Kristen Hillman, Canada’s ambassador to the US, said that Washington’s trade deficit with Canada was also raised. Hillman said the US had a $75- billion trade deficit with Canada last year, but noted that a third of what Canada sells into the US is energy exports and prices have been high.

Trudeau said this week that US-imposed tariffs would be “absolutely devastating” for the Canadian economy, but it would also mean real hardship for Americans.

Canada imposed duties in 2018 against the US in a tit-for-tat response to new taxes on Canadian steel and aluminium.

Canadian officials have said that it’s unfair to lump Canada in with Mexico. LeBlanc said that illegal migration from Canada to the US is only 0.6 per cent of the total, and fentanyl from Canada is 0.2 per cent of the total of US seizures.

Newfoundland Premier Andrew Furey said he had a call with New England governors this week, and said there is a significant degree of concern on both sides of the border.

“We hope it is just bluster,” Furey said. “We are preparing as if it is not. There will be no winner in a trade war.”