Alberta Premier Danielle Smith says she's opposed to the idea of cutting off energy exports to the U.S. in response to potential tariffs from incoming U.S. president Donald Trump.Gavin John/The Globe and Mail
Alberta Premier Danielle Smith, who over the weekend lobbied U.S. president-elect Donald Trump at his resort in Florida, says she expects Mr. Trump to make good on his threat to impose tariffs on Canada, but she is opposed to Ottawa’s suggestion that it could retaliate by cutting off energy exports.
Ms. Smith, who spoke briefly with Mr. Trump at his resort in Florida on the weekend, said Canada needs to be ready to respond should the U.S. impose 25-per-cent levies on Canadian products, which he has promised to implement immediately after his Jan. 20 inauguration.
“We need to be prepared that tariffs are coming,” Ms. Smith told reporters Monday, while rejecting the possibility of an export ban on energy. “Oil and gas is owned by the provinces, principally Alberta. And we won’t stand for that.”
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Canada’s response to Mr. Trump’s 25-per-cent tariff threat has been disjointed in light of turmoil in Ottawa. Prime Minister Justin Trudeau earlier this month said he would resign as leader when his party selects a replacement and in this leadership vacuum, premiers like Ms. Smith and Ontario’s Doug Ford have been floating their own suggestions and pursuing their own diplomatic missions.
Ontario Premier Doug Ford, the current rotating chair of the Council of the Federation of Canada’s premiers, is scheduled to join his provincial and territorial counterparts Wednesday in Ottawa to meet with Mr. Trudeau to discuss the response to Mr. Trump. Provincial leaders are expected to propose their own retaliatory tariffs on U.S. goods to add to Ottawa’s suggested targets – and demand more action from the federal government on border security, an issue of particular concern for Mr. Trump.
Ms. Smith, who gained access to Mr. Trump’s Mar-a-Lago club thanks to an invitation from Canadian businessman and television personality Kevin O’Leary, said Ottawa is risking a “national unity crisis” should the federal government use Alberta’s energy as a negotiating tactic. Mr. Ford countered that Canada must not shy away from dramatic moves such as curtailing electricity or energy exports.
“Let me be very clear. I’m speaking for Ontario. I’m not speaking for Alberta. I’m not speaking for Premier Smith,” Mr. Ford told reporters on Monday. “But we have to use all the tools possible when our country’s under attack economically.
“When our province is under attack economically, you just don’t roll over. You know, maybe I come from a different school,” Mr. Ford said. “I believe in negotiating through strength, not weakness.”
Mr. Ford listed Quebec’s aluminum, Saskatchewan’s potash and uranium as other things the U.S. needs – but added that he hoped to sell more of these, as well as Ontario’s electricity and critical minerals, to the United States. This, he said, would help create a “Fortress Am-Can,” and align the two countries as the U.S. seeks to reduce its reliance on China.
The U.S. is Alberta’s largest international trading partner, with crude petroleum making up the bulk of exports. Alberta’s total international merchandise exports reached $15.1-billion in September and the U.S. accounted for $13.3-billion of that, according to provincial data published in November.
NDP Leader Jagmeet Singh called for federal political leaders to support a suspension of exports of critical minerals to the U.S. if Mr. Trump proceeds with his plan.
“Bullies understand one thing: that is strength,” Mr. Singh told reporters in Ottawa on Monday. “They also understand pain. So if he wants to pick a fight with Canada, we have to make sure it’s clear that it’s going to hurt Americans as well.”
Canada is the largest foreign supplier to the U.S. of minerals such as potash, indium, aluminum and tellurium and provides the U.S. with about one-quarter of its uranium needs. Other major exports include tungsten, magnesium and niobium.
The NDP, in a statement, suggested Canada start by suspending cobalt and lithium sales to the U.S.
Foreign Affairs Minister Mélanie Joly on Sunday declined to rule out an export ban on energy in retaliation for potential tariffs. Ms. Smith said this could create strife across the country.
Ms. Smith said Alberta will work to shield its most valuable products – oil and natural gas – from Mr. Trump’s proposed 25-per-cent tariffs on goods from Canada and Mexico.
“Our job is going to be to work overtime to make sure that we can make the case for carve-outs,” she said.
Ms. Smith later said she is not arguing for special treatment for energy, but that when the cost of oil and natural gas are exempted from the trade calculus, the U.S. has a trade surplus with Canada. And because the U.S. relies on Canadian energy, it should refrain from imposing tariffs on all goods from its northern neighbour, she said.
However, she also said Mr. Trump appears set on imposing sweeping tariffs immediately after assuming office on Jan. 20.
“I’m not expecting any exemptions,” Ms. Smith said.
At more than four million barrels a day, Canadian crude makes up about half the supply imported into the United States. The oil is a mainstay primarily for refineries located in the U.S. Midwest that have been configured to process the heavier Canadian blends.
Ms. Smith argued the federal government is not in a position to cut energy exports.
“You should never, ever threaten something you cannot do,” she said, noting an export ban would have supply consequences for Canadian provinces.
She noted Enbridge Inc.’s Line 5 pipeline goes through Michigan before reaching Ontario. Suspending exports on Line 5 would mean pinching oil shipments from Western Canada to Ontario and subsequently Quebec, Ms. Smith said.
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Five of Canada’s largest energy-focused industry associations announced Monday they have formed a joint working group to push against Mr. Trump’s threatened tariffs.
The group’s focus is twofold: Trying to prevent tariffs from being placed on Canadian oil and natural gas exported to the U.S. in the first place, and mitigating the effect on the sector should Mr. Trump follow through with his threat.
Comprising the Canadian Association of Petroleum Producers, Pathways Alliance, Enserva, the Explorers and Producers Association of Canada and the Canadian Association of Energy Contractors, the group represents more than three-quarters of Canadian oil and natural gas production, and hundreds of businesses across the country that make up a significant part of the energy industry’s supply chain.
Ottawa has already begun preparing a list of American goods that it would target with retaliatory tariffs, including orange juice, ceramics such as toilets and sinks and some steel products, The Globe and Mail reported last week.
Ms. Smith, who said Canada will have to respond should Mr. Trump follow through on his threat, said she favours narrowing the trade gap.
“I think the solution is that we find ways to buy more American goods,” she said, noting Alberta wants to build more natural gas plants and the components could come from the U.S.
“We buy lots of food products that come across from the United States,” she added. “Maybe there’s a way to buy more and bring down the cost of groceries in Alberta and Canada.”