Canadian political leaders say “nothing is off the table” when it comes to responding to potential 25% tariffs imposed by the United States, days before they take effect.
But tensions are emerging within “Team Canada” over whether energy supplies should be a tool in a potential tariff war with the United States.
President-elect Donald Trump, who takes office Monday, has threatened to immediately impose taxes on Canadian goods in a bid to force the country to crack down on illegal immigration and drug trafficking 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 out of the question,” Trudeau said at a news conference with the premiers after the day-long meeting.
“What we have agreed on is that we must rise to the challenge we face and that the burden is shared across the country.”
“We will defend Canada, we will protect Canadians,” he added.
The Prime Minister also said there would “absolutely” be support for affected sectors if the tariffs materialise.
About 75% of Canadian exports go to the United States, and economists say the taxes would be devastating for the country.
Canada is preparing a number of countermeasures should the Trump administration move forward with either a blanket 25% levy on all products or a more targeted approach.
Canadian lawmakers have pressured their U.S. counterparts in recent weeks to avoid tariffs, including personal visits to Trump Mar-a-Lago Resort in Florida.
Ottawa also promised to spend C$1.3 billion ($900 million; £700 million) on new security measures along the nearly 9,000km-long US border with the United States. , in order to allay some of Trump’s concerns.
But there are growing fears that tariffs – at least in some form – are inevitable.
Trump has long been a supporter of tariffs, calling them “the greatest thing ever invented.”
They are at the heart of its economic vision. He sees it as a way to grow the American economy, protect jobs and increase tax revenue.
Canadian officials argue it would hurt the U.S. economy, increase inflation for American consumers — including by raising prices at the pump — and hamper investment.
They also warn that tariffs could harm national security, given that Canada, a U.S. ally, is a key source of energy and critical minerals.
Although there have been efforts toward a unified approach to the threat, cracks within the coalition emerged Wednesday.
Alberta Premier Danielle Smith did not sign the joint statement released after the meeting, which she attended virtually.
On social media, she said the oil-rich province would not accept export tariffs on energy or other products, nor a ban on their exports.
“We will take whatever action is necessary to protect Albertans’ livelihoods from such destructive federal policies,” she said.
Trudeau and the premiers of Ontario, Quebec and Newfoundland are among those willing to impose tariffs on energy or cut off energy exports to the United States.
“I look at energy as the queen of Canada in this game of chess,” Newfoundland and Labrador Premier Andrew Furey said before the meeting.
“We don’t need to denounce our queen too soon. The opposition needs to know that the queen exists, but they don’t need to know what we are doing with the queen.”
About 40% of the crude that passes through U.S. oil refineries is imported, and the vast majority comes from Canada.
It also supplies the United States with natural gas and electricity.
“We are all united that we have to act robustly,” Trudeau said when asked about Smith’s response.
According to to various analyzesCanada’s GDP could decline between 1.8% and 3.38% and between 2.6% and 5.6% if general tariffs of 25% were imposed on Canadian products, depending on how Canada would retaliate and if Canada retaliated.
US GDP would be reduced by 0.9 to 1.6%, according to these reports.
Knowing that the difficulty of responding is not proportional “means we have to be smarter about how we (Canada) respond — and that’s tricky,” said Drew Fagan, a professor at the Munk School of Global Affairs and Public Policy from the University of Toronto.
“It’s difficult to be strategic with an administration like this, whose thinking is often a little more spontaneous.”
Ontario Premier Doug Ford has suggested that up to 500,000 jobs could be lost in his province – the heart of the country’s auto sector – due to the currently proposed tariffs.
Alberta could see 50,000 jobs lost, according to financial forecasts.
The expected tariff fight comes as Canada faces domestic political challenges.
Trudeau will step down as prime minister once the ruling Liberal Party chooses a new leader in March.
He said Wednesday he would not run in the next election.
Elections will take place this year in Canada, perhaps as early as this spring.
With additional reporting from Nadine Yousif in Toronto.
