How Canada and the country鈥檚 premiers must respond to Trump鈥檚 trade and energy聽policies
Canada鈥檚 trade and economic policies have been thrown into a state of chaos in the weeks following United States President-elect Donald Trump鈥檚 on Canadian and Mexican exports to the U.S.
The federal government is now suffering an internal crisis with of Deputy Prime Minister and Finance Minister Chrystia Freeland. Canada鈥檚 provincial premiers, led by Ontario鈥檚 Doug Ford, have responded by emerging from a recent meeting asserting their in terms of trade and foreign policy.
Unfortunately, the provinces are too fragmented and divided among themselves to provide effective and co-ordinated responses to Trump without federal leadership.
This point was highlighted by Ford鈥檚 efforts to present a united front on behalf of his fellow provincial leaders. He found himself promptly when he threatened to cut off energy exports to the U.S. if the Trump administration followed through on its tariff threats.
Improvised and contradictory responses will do nothing but encourage Trump to continue to engage in these sorts of threats and behaviours. That point has been by members of Trump鈥檚 previous administration.
Canada now needs to use its substantial negotiating assets against Trump given his threat represents a of the United States-Mexico-Canada (USMCA) trade deal and previous trade agreements between the U.S. and Canada.
These accords were designed, from Canada鈥檚 perspective, to prevent the U.S. from engaging in precisely the sort of unilateral trade action that Trump is now threatening.
Canada鈥檚 energy advantage
Central to that understanding had been the concept that Canada would guarantee the U.S. access to its energy resources. In exchange, the Americans consented to a formal and binding dispute resolution mechanism when trade disputes arise, and agreed not to engage in unilateral trade actions.
Because to the U.S., this provides an obvious leverage point.
Canada鈥檚 position in this regard has actually been reinforced by the previous Trump administration鈥檚 actions. The original 1988 and the 1994 (NAFTA) contained provisions guaranteeing American access to Canadian energy on an equal basis with Canadian consumers.
Trump agreed to remove these provisions from the USMCA. This has handed Canada an important energy bargaining chip in dealing with a second Trump presidency.
Where Ford was right 鈥 and wrong
Ford may have had the right idea in on Canadian energy exports to the U.S. in retaliation for Trump鈥檚 tariffs. But he was too direct in his approach, and his suggestion of outright export bans was by his fellow premiers.
Ford鈥檚 idea was even impractical for his own province. Ontario鈥檚 electricity exports to the U.S. are relatively modest and essentially transactional. Trade with neighbouring states and provinces is necessary for the management of Ontario鈥檚 own electricity grid.
Specifically, there are times when Ontario electricity, sometimes at 鈥渘egative鈥 prices, meaning the province has to pay its neighbours to take electricity off its hands. This has been the case especially when the output from Ontario鈥檚 inflexible nuclear power plants exceeds the province鈥檚 grid demand and needs somewhere to go.
That said, because Trump鈥檚 threats violate the foundations that have defined the Canada-U.S. trade over the past four decades, a response in the area of energy would be justified and strategic.
But rather than imposing direct export restrictions on Canada energy exports, a smarter approach could involve the threat of on Canadian exports of energy and other resources to the U.S. Such charges would significantly increase energy and other costs for Americans.
An export charge could be applied directly by the federal government. That would bypass the objections of provincial premiers and impose some unity on Canada鈥檚 approach.
Engaging American states
Canada鈥檚 premiers would be smarter to focus on engaging with their sub-national counterparts in neighbouring states rather than conducting their own freelance diplomacy.
In particular, they should encourage the governors of Great Lakes states to emphasize to the incoming administration and congressional representatives the extent to which Trump鈥檚 proposed tariffs would do as much harm to their economies as they would to Canada鈥檚.
Ford is particularly well-positioned to engage in this sort of province-to-state diplomacy. The level of integration between Ontario鈥檚 vehicle manufacturing sector and the manufacturing economies of the now states around the Great Lakes mean that Trump鈥檚 tariffs would be enormously disruptive to their economies as well.
At the national level, Canada needs to recognize that the assumptions that have underpinned the Canada-U.S. trade relationship for the past 40 years are in the .
If Canada is to avoid simply offering itself up as a fragmented and compliant American resource colony, it needs to formulate a strategy that leverages its assets, particularly energy.
Canada also needs to strengthen . Whether Canada鈥檚 federal and provincial leaders are up to these tasks remains an open question.
Mark Winfield is a professor in the Faculty of Environmental and Urban Change, 91亚色
This article is republished from .
