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Trump’s Tariffs Are Coming and Will Include Oil, Alberta Premier Warns
(Bloomberg) -- Canadians should be prepared to face US tariffs once Donald Trump assumes the presidency next week, with no exemptions for oil, Alberta Premier Danielle Smith warned after meeting the president-elect in Florida.
The conservative leader of Canada’s main oil-producing province met with Trump at his Mar-a-Lago resort over the weekend. Canadian Prime Minister Justin Trudeau said in an interview on MSNBC that Canada will respond with counter-tariffs against the US if Trump follows through on his threat to impose a 25% levy on Canadian goods.
“We do need to be prepared that they are likely to come in on Jan. 20,” Smith said at a news conference on Monday. “I haven’t seen anything that suggests that he’s changing course.”
Canadian heavy crude prices for March weakened with the discount to the US benchmark widening to about $14.50 a barrel from about $13.60 on Friday, according to traders and brokers.
Trump has given different reasons for threatening tariffs on Canada. Initially, he said they would be imposed unless the country better secured its border with the US — prompting Canada to announce a C$1.3 billion ($901 million) plan to address his concerns. More recently, he has claimed Canada is “subsidized” by the US due to a trade deficit and threatened to use “economic force” to make the country the 51st US state.
More than half of US crude imports come from Canada, most of it from Alberta, which sells it at a discount to West Texas Intermediate, the benchmark for American oil. Canada sends almost all of its oil exports of about 4 million barrels a day to the US. Only a single pipeline system in Western Canada runs to a Canadian port, allowing the country’s producers to ship their oil to other countries, avoiding the US entirely. The heavy oil produced in the oil sands accounts for almost half the crude US Midwest refineries turn into gasoline and diesel.
Also Monday, five energy-focused trade associations including the Canadian Association of Petroleum Producers, Pathways Alliance, Enserva, the Explorers and Producers Association of Canada and the Canadian Association of Energy Contractors announced they had formed a working group to push back against the threat of tariffs while preparing to mitigate impacts in the event those levies become a reality.
Asked whether Canada could curb energy supplies to the US in response to tariffs, Foreign Affairs Minister Mélanie Joly told CTV News: “Everything is on the table.”
Threats to cut off oil are “empty” and would spark a national unity crisis, Smith said. “We won’t stand for that and you should never, ever threaten something you cannot do,” she said, noting that a key pipeline — Enbridge Inc.’s Line 5 — runs through the US and supplies refineries in Ontario and Quebec with western Canadian crude.
Smith also cautioned against Canada retaliating by imposing across-the-board 25% tariffs on US goods. “That would harm Canadian citizens at a time when we have an affordability crisis,” she said.
--With assistance from Laura Dhillon Kane and Randy Thanthong-Knight.
(Adds trade group statement in seventh paragraph, additional Smith quote to final paragraph.)