U.S. president-elect Donald Trump’s promise to slap an across-the-board tariff of at the least 10 per cent on all imports together with from Canada is unlikely to use to Canadian oil, vitality consultants are predicting.
The specter of the tariff is inflicting numerous concern north of the border, the place the Canadian Chamber of Commerce stated such a tariff may take a $30-billion chew out of the Canadian economic system.
Rory Johnston, a Toronto-based oil market researcher and founding father of Commodity Context, stated he believes there is a very small chance that Trump’s charges would apply to Canadian oil, however it’s “fairly a doubtlessly damaging one.”
“Canada is uniquely weak to market stress posed by U.S. refineries given our lack of different egress,” Johnston stated throughout a panel for the Canadian World Affairs Institute Wednesday.
Michael Catanzaro, a former Trump vitality adviser, advised a discussion board in Washington, D.C. final week that he does not count on Trump’s marketing campaign imaginative and prescient of vitality dominance and decrease vitality prices will exclude Canada.
“We must always double down on the truth that the U.S. and Canada collectively could be this highly effective power,” he stated on the North American Vitality Preeminence Discussion board hosted by the right-leaning Hudson Institute in Washington on Nov. 8.
Greater than 77 per cent of Canadian exports go to the U.S. and commerce includes 60 per cent of Canada’s gross home product. A major proportion of that comes from oil and fuel.
Canada can be the biggest supply of U.S. vitality imports, and virtually all Canadian crude oil exports went to its neighbour in 2023. Most of that makes its means via pipelines to the Midwest, the place the important thing battleground states flipped for Trump on guarantees of creating life extra inexpensive.
With out exemptions for Canadian crude, many consultants agree that the associated fee at American pumps is definite to extend. It is unlikely the Republican chief would take motion that’ll make fuel price extra, Johnston stated.
Johnston added there may very well be a scenario the place Canada sees a boon from Trump’s tariffs. If the Republican chief places these charges on all oil imports besides Canada “that’s truly a web good factor for Canadian exports.”
However all of this comes with the caveat that there is been a rocky relationship between Prime Minister Justin Trudeau and Trump, and the Liberal authorities in Canada has been at odds with the Republican politically on a lot of fronts together with local weather motion and renewable vitality.
Catanzaro recalled a gathering with Canadian officers after Trump pulled the U.S. out of the Paris Local weather settlement, a world treaty to chop greenhouse gases, throughout his first administration — a transfer the president-elect has promised to repeat.
“They had been very hostile to us and to the administration,” Catanzaro stated.
The Canadian response set the bilateral relationship again for a while, Catanzaro stated.
Fen Hampson, a professor of worldwide affairs at Carleton College in Ottawa and co-chair of the Skilled Group on Canada-U.S. Relations, stated he’s not sure the Republican chief could be prepared to offer a tariff concession below Trudeau.
Hampson stated Trump would know that giving Canada a right away exemption would offer Trudeau a robust argument about his potential to barter with the president-elect forward of Canada’s looming election. The Republican chief wouldn’t be pleased with that final result, given their notably rocky relationship throughout Trump’s first administration, Hampson added.
Trump known as Trudeau “weak” and “dishonest” after the prime minister criticized the president’s 2018 tariff actions on the G7 summit in Quebec. There was one other blow-up when Trudeau and different NATO leaders gave the impression to be on video speaking a couple of Trump press convention the next yr. Trump known as the prime minister “two-faced.”
Robert Lighthizer, Trump’s then-trade consultant, recounted in his e-book that U.S.-Canada relations had been “at their lowest ebb because the failed American invasion of Higher Canada throughout the Struggle of 1812.”
The Canada-U.S.-Mexico Settlement, negotiated below the primary Trump administration, will come below assessment in 2026. Hampson stated Trump may use the tariffs, or a risk of them, to power Canada into concessions.
Wilbur Ross, the previous U.S. commerce secretary who was concerned within the negotiation of that trilateral settlement, not too long ago advised CBC that Trump is prone to carve out exemptions for sectors reminiscent of Canadian oil and fuel.
Eric Miller, president of Rideau Potomac Technique Group, stated politicians run for workplace in poetry and govern in prose, agreeing that wide-reaching tariffs on Canadian vitality had been unlikely.
This report by The Canadian Press was first revealed Nov. 14, 2024.
