Canada Needs United Front to Counter Trump Tariff Threat, Finance Minister Says

By Paul Vieira

OTTAWA--Canada's federal and regional political leaders must present a united front in fighting a proposed 25% tariff on the nation's exports to the U.S. that President-elect Donald Trump wants to impose, Finance Minister Chrystia Freeland said Friday.

Freeland reiterated at a Toronto press conference that Canada is prepared to impose its own retaliatory trade measures against the U.S. should Trump fulfill his pledge. However, disagreements among the premiers, or governors, of Canada's provinces are already emerging about applying economic pressure on its biggest, most important trading partner.

"For a Canadian response to be strong and effective, Canada needs to be united," Freeland said. "The ultimate response we come up with needs to be one that all of our country stands behind."

Ontario Premier Doug Ford, the leader of Canada's most populous province, has mused about shutting down electricity exports to the U.S. Northeast in the event the 25% tariff kicks in. The leader of the oil-rich province of Alberta, Danielle Smith, said she doesn't agree with that approach. Crude oil is one of the biggest U.S.-bound Canadian exports.

Smith and another western Canadian premier, Scott Moe of Saskatchewan, fiercely rejected the idea of an export tax on key commodities that Canada sells to the U.S., such as energy, potash and uranium. This is under consideration among Canadian officials but no final decision has been made, according to a person familiar with the discussions.

Smith said that an export tax "would be a terrible idea." Moe, whose province is also rich in natural resources, said Prime Minister Justin Trudeau hadn't broached the concept of an export tax on commodities in the Canadian leader's talks with the provinces.

"If they are under consideration, that would be a complete betrayal by the Trudeau government of the team approach they have been advocating and a complete betrayal of Canadians," Moe said in a social-media post.

Under Canada's system of federalism, the provinces have responsibility for energy and natural resources within their own borders. That makes provincial leaders protective of attempts by the federal government to control production.

Late last month Trump, in a post on the Truth Social platform, said his pledge to slap hefty tariffs on his North American partners stems from an inability by Canada and Mexico to stem the flow of migrants and illegal drugs into the U.S.

A 25% tariff risks triggering a recession in Canada, economists warn. Bank of Canada Gov. Tiff Macklem said a tariff at that level represents a major uncertainty for the economy, and risks weighing on investment activity.

Freeland said she spoke to some western Canadian officials Friday morning, and is optimistic the federal and provincial governments will converge on a united strategy.

"We have to be candid about the reality of the incoming U.S. administration," Freeland said. "This is an administration which openly has a strategy of creating economic uncertainty outside the United States as a strategy to discourage investment anywhere other than the United States."

Write to Paul Vieira at [e-mail]

(END) Dow Jones Newswires

12-13-24 1604ET