Doug Ford response to Trump’s tariff threat lacks credibility

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Mark Winfield is a professor of Environmental and Urban Change at York University, and co-chair of the Sustainable Energy Initiative. He is co-editor of Sustainable Energy Transition in Canada (UBC Press 2023).

Ontario Premier Doug Ford has moved into the forefront of responses to U.S. president-elect Donald Trump’s threats to impose a 25 per cent tariff on Canadian exports to the country, and more recently to use “economic force” to annex Canada.

Mr. Ford’s initial response to potential tariffs was to threaten to cut off electricity exports to the U.S. from Ontario. This was followed, somewhat contradictorily, by a proposal for a “Fortress Am-Can” around energy. This would involve deepening energy system interconnections between Canada and the United States. The apparent goals, in part, would be to facilitate exports of “clean” nuclear energy from Ontario, as well as co-operation on new nuclear projects in both countries.

The premier may well be on the right track.

Given the portion of oil, gas and electricity that flow to the U.S. from Canada, energy provides an obvious point of leverage in the current dispute. Canada’s advantageous position in this regard was actually reinforced by the previous Trump administration’s agreement to remove from the USMCA the provisions contained in previous trade agreements that had guaranteed Canadian energy exports to the U.S.

However, threats to reduce the flow of Canadian energy to the U.S., or to impose some form of export charge, need to be credible in order to be effective. And Mr. Ford’s approach has so far lacked credibility.

Unfortunately, Ontario’s leverage in this matter is far less than its premier seems to believe. The province’s electricity exports to the U.S. are relatively modest. The exports that do occur are essentially transactional and necessary for the management of the province’s own electricity grid.

Ontario’s “Fortress Am-Can” energy proposal seems an equal stretch of credibility. Extensive co-ordination around electricity system reliability already takes place between Canadian and American grid operators. On “clean” energy exports, it is important to note that Ontario’s nuclear reactor fleet is actually shrinking with the long-overdue retirement of the Pickering A plant at the end of December. At the same time, polluting gas-fired generation has been rising dramatically.

As for the notion of expanding nuclear capabilities on either side of the border, U.S. utilities and grid operators are looking carefully at the final costs of the recently completed Vogtle nuclear power plant in Georgia. With a final $50-billion price tag for 2,200 megawatts of capacity, the project is raising serious questions about the economic viability of new nuclear power projects.

New estimates from the Tennessee Valley Authority, suggesting that the cost of Ontario Power Generation’s 1,200-megawatt four-unit ‘small modular reactor’ project at Darlington in Clarington, Ont. could hit $25-billion, are raising similar questions. And with the Ford government also proposing a four-reactor 4,800 megawatt new-build project at the Bruce Power site, the Americans may well be happy to let the province take a more-than $100-billion chance to confirm what they are already learning about the costs of new nuclear reactors. The province’s electricity ratepayers are unlikely to be as pleased. All of this while the costs of renewable energy and energy storage continue to fall.

Canada’s premiers, including Mr. Ford, need to curtail their efforts at “freelance” diplomacy in response to Mr. Trump. Instead, they need to focus on engaging with their counterparts in neighbouring states. In particular, they need to encourage state governors to emphasize to the incoming administration that Mr. Trump’s proposed tariffs would do at least as much harm to their economies as Canada’s.

Canada needs to recognize that the assumptions that have underlain its relationship with the U.S. for the past 40 years are being shattered. If Canada is to avoid simply offering itself up as a fragmented, compliant and even annexed resource colony of the U.S., it needs to formulate a strategy that leverages its energy assets. Canada also needs to strengthen its wider economic and political alliances with the rest of the Americas, Europe and Asia, where there is also growing alarm over the signals coming from the new U.S. administration.