Trudeau, Canada’s Premiers Spar Over Using Resources as Trade Weapon

Prime Minister Justin Trudeau and the premiers of Canada’s provinces are in high-stakes talks over how far to go in using oil and other commodities as a weapon if the US starts a regional trade war.

Author of the article:

Bloomberg News

Brian Platt and Laura Dhillon Kane

Published Jan 15, 2025  •  3 minute read

Doug Ford, Ontario's premier, wears a "Canada Is Not For Sale" hat as he arrives at a meeting of the premiers and prime minister on Wednesday. Photo by David Kawai /Photographer: David Kawai/Bloomb

(Bloomberg) — Prime Minister Justin Trudeau and the premiers of Canada’s provinces are in high-stakes talks over how far to go in using oil and other commodities as a weapon if the US starts a regional trade war. 

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Trudeau is meeting with the leaders of Canada’s 13 provinces and territories in Ottawa on Wednesday, trying to get on the same page over how to respond if US President-elect Donald Trump follows through on his vow to impose 25% tariffs on all goods the US imports from Canada.

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The prime minister and the premiers are preparing a list of retaliatory tariffs. The government has also examined the possibility of harsher measures, such as placing export taxes on oil, uranium and potash to drive up costs for US consumers and businesses in the event Trump starts an all-out trade war. 

The premiers of Alberta and Saskatchewan — two provinces that are major producers of those commodities — are opposed to that idea.

In his opening remarks at the meeting, Trudeau stressed a positive message, saying Canada and the US have opportunities to build “partnerships” on energy. Canada has the critical minerals needed to fuel the technological transformation of the US economy, the prime minister said.

“If they don’t get them from Canada, they’ll get them from China. If they can’t get them from Canada or China, they don’t get them from anywhere,” Trudeau said. But he also said retaliatory tariffs were on the table and would be discussed at the meeting.

Ontario Premier Doug Ford, who arrived at the meeting wearing a blue hat emblazoned with the words “Canada Is Not For Sale,” said he was a “strong believer” in retaliatory tariffs. 

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“You can’t let someone hit you over the head with a sledgehammer without hitting them back twice as hard, in my opinion,” he said.

Both Ford and the premier of Quebec, Francois Legault, said everything was on the table when it came to responding to Trump’s tariffs. “There are a number of scenarios that we can look at, but we’re not ruling anything out because the impact that these tariffs could have would be huge,” Legault said.

Canada ships some 4 million barrels of oil a day to the US, and its heavy crude is sold at a discount to West Texas Intermediate, the benchmark for American oil. Fossil fuels are such a huge part of trade between the two countries that they tip the trade balance — the US would actually have a trade surplus with Canada if not for energy.

Canadian uranium is also the biggest foreign source of fuel for US nuclear power plants, and potash from the country’s western provinces is a huge source of fertilizer for American farms. Export levies would be designed to ramp up the pain on US buyers to pressure Trump to lift tariffs quickly.

Scott Moe, the premier of Saskatchewan, home to significant uranium and potash deposits, said on his way into the meeting that export taxes would be “counter-productive” and the focus needs to be on avoiding and reducing tariffs.

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“It just isn’t going to be conducive to bringing this conversation back to where it needs to be,” Moe said. 

Energy is Canada’s “queen in this game of chess,” said Andrew Furey, the premier of the east-coast province of Newfoundland and Labrador, which also has significant oil reserves. 

“We don’t need to expose our queen too early. The opposition does need to know that the queen exists, but they don’t need to know what we’re going to do with the queen,” Furey said. 

“So let’s see what the tariffs actually are first, and have a proportional — but let me very clear — a strong response to the United States. We need to in no way, shape or form let the urgency of this economic and fiscal crisis jeopardize our national identity, nor our national unity.”

The tariff threat has also brought to the forefront longstanding frustrations with Canada not refining more of its oil at home and only recently completing a pipeline expansion to serve Asian markets. Northwest Territories Premier R.J. Simpson called on the country to boost its ability to refine oil and critical minerals domestically, and to diversify its trading partners. 

“Why are we in this situation?” he asked. “Why do we have an economy that can be crushed on a whim by a president?”

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