WASHINGTON (AP) — Canada’s energy minister came to Washington this week to warn U.S. lawmakers against President-elect Donald Trump’s tariff threat against Canada: They would inflict economic pain on Americans, with higher prices and job losses.
Jonathan Wilkinson, Canada’s minister of energy and natural resources, said he felt compelled to sound the alarm about inflationary risks created by a president who was elected largely on a promise to lower the costs.
“This will lead to higher gas prices, higher food prices and higher natural gas prices to heat homes,” he told The Associated Press on Wednesday. “This will lead to an increase in electricity prices. This is not an issue that Donald Trump campaigned on. He campaigned to actually reduce the price of energy.
Asset threatened to impose radical customs tariffs of 25% on Canada as well as in Mexico. He has also threatened to impose tariffs on China and Europe, creating a sense of uncertainty over whether this is simply a negotiating ploy or a massive restructuring of foreign relations American.
Trump and his team have in recent days reiterated their promise to impose tariffs on other countries and downplayed the risk of rising inflation.
“During his first term, President Trump instituted tariffs that created jobs, spurred investment and caused no inflation,” said Karoline Leavitt, transition spokesperson and new press secretary. from the White House. “President Trump will move quickly to repair and restore an economy that puts American workers first by reshoring American jobs, reducing inflation, raising real wages, cutting taxes, reducing regulations and by unleashing American energy. »
Canada is considers imposing retaliatory tariffs on American orange juice, toilets and certain steel products if Trump carries out his threat. When Trump imposed higher tariffs during his first term, Canada announced new multibillion-dollar tariffs in 2018 against the United States, in a tit-for-tat response to new import taxes. Canadian steel and aluminum. The conflict never triggered broader inflation across the economy, although it did result in higher costs for some.
But by targeting the United States’ second-largest trading partner after Mexico, Trump risks upending the auto, lumber and oil markets, which could quickly ripple through to consumers.
“I think people just need to understand that we are going down a path right now that will increase the cost of living for Americans without any benefit,” Wilkinson said. “Zero profit. »
Wilkinson plans to run for leader of the Liberal Party in Canada after Prime Minister Justin Trudeau announced his resignation this month. He hopes to make a decision by the end of the week.
Although Trump has said he would announce tariffs immediately after being sworn in on Monday, it remains unclear what that would actually entail. It’s possible he could simply announce his intention to impose tariffs, phase them in on a schedule, or simply declare an economic emergency to justify higher taxes on imports.
Trudeau said Wednesday that “nothing is out of place” when it comes to responding to the proposed tariffs, but no region of the country should bear the full brunt of that response. He held a five-hour meeting in Ottawa with the country’s prime ministers to discuss Trump’s threats.
Although Trump has signaled a willingness to act on his own, Democrats are seeking to build legislative guardrails against his ambitions – a sign that they are taking seriously the types of scenarios described by Canada, Mexico and others. others.
Reps. Suzan DelBene, Democrat of Washington, and Don Beyer, Democrat of Virginia, introduced a bill Wednesday that would roll back the International Emergency Economic Powers Act, which gives the president the authority to impose sanctions on nations hostile foreign countries that pose an emergency threat. in the United States
DelBene said on a call with reporters to preview the legislation that Trump’s tariffs constitute a “domestic sales tax on foreign products that charges families higher prices.” “This is the classic definition of a trade war,” she said.
Despite Trump’s assertion that the United States does not need Canada, a quarter of the oil America consumes every day comes from this country.
Wilkinson said that in addition to rising consumer prices, the United States could face job losses in Canadian energy processing sectors, particularly in the Midwest and Gulf states. “If you don’t have access to Canadian gas, you can’t do this. It’s the same thing with potash.
Canada’s threat comes amid concerns about the impact of Trump’s tariff proposals on the U.S. economy and rising inflation in boardrooms, on Wall Street trading floors and among Federal Reserve officials. The Fed has already indicated that it is concerned that the tariffs could slightly increase inflation in the United States.
Neel Kashkari, president of the Fed’s Minneapolis branch, said Wednesday that a one-time tariff imposed by the United States probably wouldn’t make inflation much worse in the long run. But once other countries fight back, Kashkari said, the impact could worsen.
“If there’s tit for tat, it becomes much more complicated to try to predict, what the imprint of that will be on real inflation in the future,” he said.
Wilkinson said, “My goal is actually to try to move us away from the tariff conversation, which I would say is a lose-lose. »
