President-elect Donald Trump’s promise to impose a blanket tariff of at least 10 percent on all imports, including those from Canada, is unlikely to apply to Canadian oil, energy experts predict.
The threat of the tariff is causing much concern north of the border, where the Canadian Chamber of Commerce said such a tariff could take $30 billion off the Canadian economy.
Rory Johnston, a Toronto-based oil market researcher and founder of Commodity Context, said he believes there is a very small chance that Trump’s tariffs will be applied to Canadian oil, but it is “pretty potentially damaging.”
“Canada is uniquely vulnerable to the market pressure posed by US refineries given our lack of alternative outlet,” Johnston said during a Canadian Institute of Global Affairs panel on Wednesday.
Michael Catanzaro, Trump’s former energy adviser, said at a forum in Washington, D.C. last week that he doesn’t expect Trump’s campaign vision of energy dominance and lower energy costs to exclude Canada.
“We need to double down on the fact that the United States and Canada together can be this powerful force,” he said at the North American Energy Preeminence Forum hosted by the right-leaning Hudson Institute in Washington on Nov. 8.
More than 77 per cent of Canadian exports go to the United States and trade comprises 60 per cent of Canada’s gross domestic product. A significant proportion of that comes from oil and gas.
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Canada is also the largest source of U.S. energy imports, with nearly all of Canada’s crude oil exports heading to its neighbor in 2023. Most of that comes via pipelines to the Midwest, where key states On the battlefield they leaned towards Trump with promises of making life. more affordable.
Without exemptions for Canadian crude, many experts agree that the cost at American pumps will surely increase. The Republican leader is unlikely to take steps that would make gas cost more, Johnston said.
Johnston added that there could be a situation where Canada sees a blessing from Trump’s tariffs. If the Republican leader imposes those tariffs on all oil imports except Canada, “that is actually a net good thing for Canadian exports.”
But all of this comes with the caveat that there has been a rocky relationship between Prime Minister Justin Trudeau and Trump, and that Canada’s Liberal government has been at political odds with the Republican on several fronts, including climate action and renewable energy. .
Catanzaro recalled a meeting with Canadian officials after Trump withdrew the United States from the Paris climate accord, an international treaty to reduce greenhouse gases, during his first administration, a move the president-elect has vowed to repeat.
“They were very hostile to us and to the administration,” Catanzaro said.
The Canadian reaction set back the bilateral relationship for some time, Catanzaro said.
Fen Hampson, a professor of international affairs at Carleton University in Ottawa and co-chair of the Expert Group on Canada-U.S. Relations, said he’s not sure the Republican leader would be willing to grant a tariff concession under Trudeau.
Hampson said Trump would know that granting Canada an immediate waiver would give Trudeau a powerful argument about his ability to negotiate with the president-elect before Canada’s impending election. The Republican leader would not be happy with that outcome, given their notoriously rocky relationship during Trump’s first administration, Hampson added.
Trump called Trudeau “weak” and “dishonest” after the prime minister criticized the president’s tariff actions in 2018 at the G7 summit in Quebec. There was another explosion when Trudeau and other NATO leaders appeared on video talking about a Trump press conference the following year. Trump called the prime minister “two-faced.”
Robert Lighthizer, Trump’s then trade representative, recounted in his book that relations between the United States and Canada were “at their lowest point since the failed American invasion of Upper Canada during the War of 1812.”
The Canada-U.S.-Mexico Agreement, negotiated under the first Trump administration, will come under review in 2026. Hampson said Trump could use tariffs, or a threat of them, to force Canada to make concessions.
Wilbur Ross, a former US commerce secretary who was involved in negotiating that trilateral deal, recently told CBC that Trump is likely to establish waivers for sectors such as Canadian oil and gas.
Eric Miller, president of Rideau Potomac Strategy Group, said politicians run for office in poetry and govern in prose, and agreed that far-reaching tariffs on Canadian energy were unlikely.
© 2024 The Canadian Press
