Natural Resources Minister Jonathan Wilkinson says U.S. customers would pay more for gasoline if president-elect Donald Trump's proposed tariffs on Canada take effect, and he's proposing the two countries form an energy and mineral alliance instead.Sean Kilpatrick/The Canadian Press
Natural Resources Minister Jonathan Wilkinson warned an American audience Wednesday that Donald Trump’s threatened steep tariffs on Canada would drive up gasoline prices in the U.S. Midwest by up to 75 cents per gallon – an example of how heavily the United States relies on its northern neighbour for energy and critical minerals.
A jump in gasoline prices would run contrary to the U.S. president-elect’s campaign talk of how fuel costs would plummet under a second Trump administration.
Mr. Wilkinson proposed Ottawa and Washington instead form an energy and minerals alliance to expedite the export of petroleum and critical minerals to American customers and reduce the United States’ reliance on authoritarian regimes such as Russia and China.
“The imposition of tariffs against the U.S.’s closest friend and economic partner will cause financial pain for Canadian families, no doubt,” Mr. Wilkinson told a panel discussion with the Woodrow Wilson International Center for Scholars. “But it will also increase prices of energy and food for American consumers.”
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He said instead of a tariff war that would force retaliation from Canada, the two countries should create a new alliance to boost oil and gas production as well as the North American supply of critical minerals that are needed for energy, defence and aerospace applications.
Such a partnership would “further enhance the energy prosperity of our two nations and collectively reduce the dependence we presently have on non-aligned international actors including China,” Mr. Wilkinson said.
Mr. Trump will be sworn in on Jan. 20 and has threatened 25-per-cent tariffs on all Canadian goods until the country stops illegal migration and drug smuggling at its border with the U.S. He’s also repeatedly referred to Canada as the “51st state,” called Mr. Trudeau its “governor,” and said he would use “economic force” to try to annex Canada, while claiming a trade imbalance with Canada is a subsidy and vowing to renegotiate the Canada-U.S.-Mexico trade deal.
Mr. Wilkinson underlined how much the United States relies on Canadian energy and minerals by noting that uranium mined in Canada “powers the equivalent of almost 20 million homes across the U.S.” and electricity from several provinces “powers the equivalent of six million American homes – more more than every home in the state of Ohio.”
The minister indirectly addressed Mr. Trump’s 51st state comments as a diversion from serious matters.
“Canadians are Canadians – and we will remain Canadian,” he said. “Any suggestion to the contrary is a distraction from the challenges we both face from an increasingly aggressive China and a distraction from the real work we should be doing to build on existing mutual benefits our relationship produces, to seize the enormous additional economic and security related opportunities that are available moving forward.”
Mr. Wilkinson also played down Mr. Trump’s complaints about a trade imbalance between Canada and the United States. The incoming president has complained repeatedly about a trade deficit with Canada, where Canadians sell roughly $100-billion more annually to Americans than they buy from the U.S.
The minister said if Canada’s energy sales to the United States are removed from calculation, the U.S. has a trade surplus with Canada of more than U.S.$50-billion.
He said more than half of the goods the United States buys from Canada are raw materials to feed American manufacturers.
Plus, he said, Canada is a major customer for many Americans. “Thirty-six U.S. states rely on Canada as their number one export market,” he said. “Canadian consumers and businesses purchase more goods from the United States than China, Japan and Germany combined.”
Canada ships more than 4 million barrels of oil to the United States each day, he added. “For Midwestern U.S. refineries there are no real economically viable alternatives. And for U.S. Gulf refineries, the alternative is to purchase from Venezuela – hardly a friendly or stable partner."
The same holds for natural gas, he continued. “Canadian gas supplies parts of the U.S. where local supply does not exist, such as in the Pacific Northwest and California,” Mr. Wilkinson said.
Canadian critical minerals would rise in cost if hit with U.S. tariffs and for Americans the only alternative would be undemocratic regimes that have poor relations with Washington, Mr. Wilkinson said. Canada is the largest supplier of the fertilizer ingredient potash, he noted. “It also enables the U.S. to avoid purchasing from less reliable and adversarial countries including Russia and Belarus.”
Canadian uranium allows the U.S. to reduce its dependence on “less reliable uranium producers such as Russia” and for other critical minerals, such as germanium, zinc, nickel, copper and graphite, “if the United States doesn’t buy from Canada, the alternative source of supply would be China,” Mr. Wilkinson said.
“The U.S. leverages the resource abundance that Canada possesses for energy and minerals that its economy requires. And it obtains low-cost energy and low-cost minerals, which allows the U.S. to access energy at a discount, then thousands of American workers refine or transform it, and sell it at a higher price to the rest of the world.”