Ontario Premier Wants Canada to Restrict Commodity Exports in U.S. Trade Conflict

Dow Jones
08/25

OTTAWA--The leader of Canada's most-populous province says it is time for the country to restrict exports to the U.S. of commodities like energy, potash and electricity as part of trade retaliation.

Ontario Premier Doug Ford said in an interview that Canada "should be using every bit of leverage we can. President Trump wants to inflict pain on Canadians. Well unfortunately, we have to inflict pain on Americans."

In March of last year, Ford tried to slap a 25% export tax on electricity shipped to the U.S., but later rescinded the measure after Trump threatened to double the 25% duty on Canadian steel and aluminum. Months later, the U.S. doubled the tariff on those metals.

Ford said he is hoping other Canadian provinces, most notably Alberta and Saskatchewan in the west, will commit to such a strategy. Those provinces are home to sizable oil and gas reserves, and have been reticent about thwarting U.S. shipments. A spokesman for Alberta Premier Danielle Smith did not immediately respond to a request for comment.

Other provincial leaders, such as British Columbia's David Eby, have recently taken an approach closer to Ford's regarding trade retaliation.

Quebec Premier Christine Fréchette, whose province is a major electricity to supplier, said she wasn't considering retaliatory measures like Ford is championing. "But nothing is excluded because this is a new phase that we're entering now," said at a press conference alongside Canadian Prime Minister Mark Carney.

In the interview, Ford said he didn't support the tentative deal that Canadian negotiators had reached last week with the U.S., because it would maintain punishing levels of tariffs on steel and automobiles. That tentative deal came apart after Canadian officials said the U.S. made last-minute demands that were deemed unacceptable. U.S. Trade Representative Jamieson Greer said it was Canada that asked for additional terms.

"Thank God the prime minister made that decision," Ford said. "I told him it was a terrible deal and I couldn't support it."

Ontario accounts for about 40% of Canada's gross domestic product, and is the focal point of the country's manufacturing sector. Economists at National Bank of Canada estimate that with the new 50% tariff, the country's manufacturing firms face an average effective tariff rate of 10%, or an increase from 6% before U.S.-Canada talks broke down.

"Higher tariffs are particularly unwelcome for employment at a time when Canada's manufacturing base is already under pressure," the bank's economists said. They added the number of manufacturing firms in Canada fell in the first quarter to its lowest level in at least a decade, excluding the Covid-19 pandemic years.

Trump on Monday threatened to squeeze the Ontario heartland even further, vowing to double tariffs on motor vehicles to 50%, and apply that level to previously exempt automotive parts.

"I am not too sure what Trump's thinking, or if he's communicated it properly with the chief executives of parts and automobile manufacturers," Ford said of the auto duties, warning it could lead to the closing of U.S. auto parts.

 
 

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