Canada’s oil-rich province of Alberta is deeply disturbed by President-elect Donald Trump’s threat to impose a 25% tariff on Canadian products.
Canadian politicians and energy experts are warning that excessive tariffs would have dire consequences for the economy of America’s northern neighbor and would also raise prices for American consumers.
“Canada has no choice,” Dennis McConaghy, a former energy executive who lives in Alberta, told the BBC.
“We have to find a compromise with Trump.”
President Trump announced Monday that he would impose sweeping tariffs on Mexico and Canada as soon as he takes office in January, but there was no suggestion that they would exclude oil and gas.
Analysts noted that it is unclear whether the tariffs will ultimately be realized, as President Trump has been known to use such threats as a negotiating tactic to achieve his goals in the past.
In this case, President Trump indicated that the levy would remain in place until Canada and Mexico share a border with the United States, limiting the flow of illegal immigrants and drugs into the country.
As the threat persists, Canadian officials and industry leaders are working to meet Trump’s demands while also communicating to the public the importance of the Canada-U.S. energy partnership.
Lisa Baiton, president and CEO of the Calgary-based Canadian Association of Petroleum Producers, said the levy would reduce Canada’s oil production.
McConaghy said it would result in job losses in Alberta, with potential impacts across Canada, as poorer provinces rely on cash transfers of revenue generated by wealthier provinces like Alberta to offset costs and provide social services. .
He said it could also lead to a devaluation of the Canadian dollar at a time when the dollar is already suffering due to domestic economic factors.
“Keep in mind that about 80% of Canada’s trade is with the United States, and much of that trade is in hydrocarbons. “Canadians cannot escape integration with the United States.”
U.S. fuel manufacturers also urged President Trump to exclude oil and gas from any proposed levies, given Americans’ heavy dependence on imported crude oil from Canada.
“Crude oil is to refineries what flour is to bakeries,” the American Fuel and Petrochemical Manufacturers (AFPM) industry group said in a statement this week.
“This is our best feedstock and input cost. “If these feedstocks become much more expensive, so will the overall cost of making fuel here in the United States.”
The United States is the world’s largest producer of crude oil and natural gas, but some regions (such as California and parts of the Northeast and Midwest) do not have the infrastructure or pipeline capacity to rely solely on American oil and require imports to get fuel to consumers. .
About 40% of the crude oil that passes through U.S. refineries is imported, most of it from Canada.
Canadian oil is particularly dependent on the landlocked Midwest, which has refineries capable of processing heavier Canadian oil blends.
AFPM said crude oil cannot be easily replaced without relying on foreign sources, which could erode U.S. energy security.
Industry groups have warned that tariffs on Canadian oil will increase operating costs in the Midwest. Some experts said the costs would fall on consumers.
Patrick De Haan, a gas price analyst in Chicago, estimated that in states such as Minnesota, Wisconsin and Michigan, gas prices could rise by up to 75 cents per gallon.
Mr. De Haan noted in a post to
Raising gas prices for American consumers would go against Trump’s promise to cut energy costs.
During the campaign, President Trump often said he planned to lower gas prices to $2 (£1.57) per gallon or less. As of the end of November, the price of regular gasoline in the United States is about $3 per gallon.
But Trump has also pledged to increase America’s energy independence by promoting domestic drilling and reducing dependence on foreign oil and gas, especially from countries not allied with the United States.
