Canada (Commonwealth) _The threat of a 25% tariff on Canadian commodities by President-elect Donald Trump has caused a great deal of anxiety in Alberta, Canada’s oil-rich state.
Politicians and energy specialists in Canada are cautioning that the high tariff will have a devastating effect on America’s northern neighbor’s economy and raise costs for US customers.
Trump declared on Monday that he will impose a universal tariff on Canada and Mexico when he takes office in January, without mentioning that it would not apply to gas and oil.
According to Lisa Baiton, president and CEO of the Canadian Association of Petroleum Producers, based in Calgary, the charge would likely lead to less oil production in Canada.
Mr. McConaghy stated that this would lead to job losses in Alberta and could potentially affect Canada as a whole, as weaker provinces rely on financial transfers from wealthier provinces like Alberta to help balance expenses and provide social services.
According to him, this could potentially lead to a depreciation of the Canadian dollar, which is already facing challenges due to domestic economic issues. Given that Americans rely mostly on imported Canadian petroleum, US fuel producers have also lobbied Trump to exclude gas and oil from any planned levies.
Although the United States is the world’s largest producer of natural gas and crude oil, some areas, like California, the Northeast, and portions of the Midwest, lack the infrastructure or pipelines to only use US oil and require imports to provide consumers with fuel.
US refineries import the vast majority of the crude they use for oil, making up around 40% of total imports. Refineries in the landlocked Midwest, originally built to handle the heavier Canadian mixes, heavily rely on Canadian oil.
According to the AFPM, there is no simple way to replace that crude without turning to foreign suppliers, which might jeopardize US energy security. A levy on Canadian oil, according to the industry organization, would increase operational expenses in the Midwest, which some experts believe will be passed on to customers.
Gas price analyst Patrick De Haan, who works in Chicago, calculated that states like Michigan, Wisconsin, and Minnesota Gas prices in Michigan and Wisconsin may increase by as much as 75 cents a gallon.
Mr. De Haan pointed out that these rising prices would affect not just gas stations but also airlines and freight carriers. An increase in oil prices for US consumers would contradict Trump’s pledge to lower energy costs.
Trump often stated during the campaign that he intended to lower petrol prices to less than $2 (£1.57) per gallon. In the United States, normal gasoline was about $3 per gallon as of late November.
Trump, however, has also pledged to strengthen American energy independence by increasing domestic drilling and reducing reliance on foreign gas and oil, especially from non-US allies.
Analysts have noted that the actual implementation of the tariffs remains uncertain, given Trump’s history of using such threats as a negotiation tool to achieve specific objectives. Trump may be using the tariffs in this instance to persuade Canada and Mexico to work together on border security.
Trump has indicated that until Canada and Mexico secure their common borders with the United States, the tariffs will stay in effect, reducing the quantity of drugs and illegal immigrants entering the nation.
In order to prevent the sweeping tariffs, Prime Minister Justin Trudeau has pledged to put up a united “Team Canada” front and cooperate with the incoming Trump administration.
The leaders of key Canadian provinces, including Ontario, Quebec, and Alberta, pushed Trudeau to act swiftly on these demands, prompting him to convene a crucial conference with provincial and territorial heads on Wednesday to decide how to proceed.
The premier of Alberta, Danielle Smith, stated that her province will be “working aggressively” in the upcoming months to establish contact with US counterparts and to emphasize that the US and its energy security would benefit from a solid collaboration with Canada.
Regardless of the strategy, Mr. McConaghy expressed his optimism that Canadian officials are acting quickly to remove the possibility of tariffs “from the table as soon as possible.”
