As President-elect Donald Trump prepares to take office in January, Alberta’s oil-dependent economy is facing heightened concerns over a potential 25% tariff on Canadian goods, a move that could severely impact the province and the broader Canadian economy.
Trump’s threat to impose the tariff across the board on imports from Mexico and Canada—without excluding oil and gas—has prompted warnings from Canadian politicians and energy experts about the grave consequences of such a decision.
Dennis McConaghy, a former energy executive based in Alberta, told the BBC that Canada has no choice but to find a way to accommodate Trump. “It has to find an accommodation with Trump,” McConaghy said, emphasizing the critical nature of the relationship between the two nations, particularly in energy trade.
The potential tariffs, which Trump has indicated will remain until both Canada and Mexico address border security issues, are still unconfirmed but are causing significant unease. While analysts caution that such threats may be part of Trump’s negotiation strategy, the prospect of tariffs has raised alarms across Canada.
Lisa Baiton, CEO of the Canadian Association of Petroleum Producers, stated that a tariff on Canadian oil would likely result in decreased production, putting thousands of jobs at risk in Alberta. McConaghy further warned that the economic repercussions could extend beyond Alberta, as poorer provinces rely on the financial transfers from the wealthier oil-producing region to fund social services.
The potential impact on the Canadian dollar is another concern, with some experts predicting a devaluation if the tariffs are implemented. “Roughly 80% of Canada’s trade is with the United States, and much of that trade is in hydrocarbons,” McConaghy said.
American fuel manufacturers have also voiced concerns, urging Trump to exclude oil and gas from any proposed tariffs. The American Fuel and Petrochemical Manufacturers (AFPM) warned that Canadian crude is essential to US refineries, especially in regions like the Midwest, where refineries are specifically designed to process heavier Canadian oil. A tariff on this oil would increase operating costs, potentially driving up prices for consumers.
Patrick De Haan, a gas price analyst, predicted that states like Minnesota and Michigan could see gas prices rise by up to 75 cents per gallon if Canadian crude becomes more expensive. This increase would counter Trump’s campaign promises to lower energy costs for American consumers.
In response, Canadian officials, including Prime Minister Justin Trudeau, have vowed to present a united front. Trudeau held an emergency meeting with provincial leaders to discuss strategies, and Alberta Premier Danielle Smith emphasized the need for close coordination with US officials to avoid the tariffs.
Smith and other provincial leaders have also called for a comprehensive border security plan to address concerns over illegal crossings, although the number of apprehensions at the US-Canada border is significantly lower than at the southern border.
With the threat of tariffs looming, Canada’s leaders are focused on resolving the issue quickly to protect the country’s economy and its crucial energy partnership with the United States.
