Following her meeting with President-elect Donald Trump at Mar-a-Lago, Alberta Premier Danielle Smith said that tariffs are imminent when Trump is sworn in as President on Jan. 20.
Smith was invited to Mar-a-Lago as a guest of Kevin O’Leary, Shark Tank star and a recent business partner of Smith.
Despite the imminent tariffs, Smith emphasized in a Monday press conference with reporters that avoiding them will require Canada to leverage its energy muscle.
According to Smith, trade deficits are a key irritant to the United States, but she said Canada buys more goods and services from the United States than vice versa when energy is excluded. She noted that the United States has a trade surplus of $58 billion sans energy, confirmed by National Bank of Canada’s report.
She added that Canada sells discounted oil to the United States. For example, $100 billion of Canadian exported oil turns into $300 billion of value-added products that the United States can sell.
Smith said that when Trump is sworn in on Jan. 20, around 100 executive orders will be incoming, and there are no suggestions that he will change course on the tariffs.
Trump’s proposed tariffs would shrink Canada’s GDP by 2.6%, costing each Canadian $1,900 annually, according to the Canadian Chamber of Commerce. The United States’ GDP would also shrink by 1.6%, costing Americans $1,300 per year.
Chief Economist of the Canadian Chamber of Commerce, Stephen Tapp, said the tariff could push Canada’s economy into a recession by the middle of 2025.
“Make no mistake, if Trump imposed these tariffs, it would represent a significant negative shock to the U.S. economy. It would raise costs for businesses, make American production less competitive internationally, and raise prices even more for consumers who’ve recently suffered through the pandemic and the highest inflation in generations,” said Tapp.
Alberta’s premier said negotiations are challenging given Prime Minister Justin Trudeau’s announced resignation, meaning Canada doesn’t have a federal representative at the table. Therefore, Smith said she’s been speaking with the U.S. administration independently.
Smith reiterated that the impending tariffs were why she’s been calling for an immediate election.
When asked whether she would consider cutting off energy supply to the United States, Foreign Affairs Minister Mélanie Joly said, “Everything’s on the table.”
Smith rebuked Joly’s comments in the press conference, saying that oil and gas fall under provincial jurisdiction and that she would not be implementing any such threat.
“And, you should never, ever, threaten something you can’t do,” said Smith.
She suggested that Joly pick up a map and see where the pipeline Enbridge Line 5 travels. If supply were to be cut off, Ontario and Quebec would also be cut off.
“There’s no point in making empty threats that cannot be executed on,” said Smith. “And, we cannot do anything that harms Canadians in a substantial way.”
Despite Alberta being an energy exporting behemoth, Smith said she is not expecting Alberta to be granted any tariff exemptions.
As for the appropriate retaliatory response, Smith said it’s too soon to tell, and what the tariffs look like on Jan. 20 will determine the proper response.
However, the premier warned that retaliatory taxes against the United States would also make everything for Canadians more expensive.
The United States produces 13 million barrels of oil daily while consuming 21 million, according to Smith. She said this oil and gas needs to come from somewhere, and there are no better options than Alberta.
“They can get it from Venezuela and Iran and Iraq, but I think we’re a much better partner than that,” said Smith. “I’m looking at using our energy relationship in a different way than I’m hearing other Canadian leaders talk about it. I’m talking about using the basis of our strong energy relationship as the reason why we shouldn’t have tariffs on any of our Canadian products.”
Canada’s premiers will meet with Trudeau in Ottawa on Jan. 15 to discuss the looming tariff threat and the best path forward.
True North previously reported that Smith will attend Trump’s inauguration in person.
The premiers will be meeting in Washington, D.C., approximately a month after Trump takes office to discuss how the tariffs are affecting Canada.