Donald Trump has threatened to slap punishing 25 per cent tariffs on “all” Canadian goods imported into the United States. This is expected to happen soon after the U.S.-president elect moves back into the White House in the new year. No Canadian, even pro-Trump conservatives, should fool themselves about the damage that these tariffs could impose on Canada.
Despite dealing with two protectionist administrations in Washington over the past nine years, the decisions made by Justin Trudeau’s Liberal government have not put Canada in a strong position to deal with what could be an existential threat to many Canadian industries.
Even though Canada is the largest source of oil imports into the U.S., there was no indication from Trump that energy would be exempt from the tariff, as had been previously speculated.
In 2023, almost all Canadian crude oil exports went to the U.S., and a 25 per cent tariff on our oil would be devastating. The expansion of the Trans Mountain pipeline earlier this year has only begun to diversify Canadian energy exports.
Since 2015, Canada’s energy and resource sector has suffered from a series of poor decisions that have left Canada still over reliant on the American economy and vulnerable to protectionism.
Also leaving Canada vulnerable is a porous border, which Trump identified as one of the key reasons for his threatened tariffs, specifically the ease with which criminals, smugglers and potential terrorists can slip across it. Between October 2022 and September 2023, there was a 550 per cent increase in the number of people detained illegally crossing from Quebec into New England.
However, while failing to address the border has been a major mistake, nothing compares to Trudeau’s attempt to turn Canada into the main character in the global effort to combat climate change.
Wrapping more and more red tape around resource development has ground its progress to a halt, leaving Canada particularly exposed to Trump’s anti-free trade agenda.
In nearly a decade of Trudeau’s leadership, Canada has failed to see a single LNG terminal begin operations. The Trans-Mountain pipeline expansion ships crude oil to the Pacific Coast, but is the only major energy project that has been completed since 2015. The Northern Gateway pipeline was snuffed out by Trudeau soon after he took office, and TMX itself was nearly smothered by a slew of government reviews and regulations, resulting in its original owner Kinder Morgan pulling its funding.
Other golden opportunities like the Energy East pipeline and LNG terminals on the Atlantic coast were also buried under the weight of regulatory hurdles and a lack of vision from the prime minister. Trudeau’s controversial dismissal of Atlantic LNG projects as having no “business case” revealed his attitude towards practical solutions.
To his government’s credit, Trudeau did step in to save the TMX pipeline in 2018 by outright buying it. This demonstrated that the Liberals may have then understood the importance of such projects, but only after driving out private investors.
Private investment in energy infrastructure continues to be stymied by stringent environmental regulations and soaring costs, making it nearly impossible for transformative projects to get off the ground. The government’s proposed emissions cap and other pieces of legislation like the Impact Assessment Act will not help.
The challenges are not limited to energy, either. Critical minerals are a requirement for electric vehicle batteries and other high-tech industries prominent in trading partners like South Korea and Taiwan, but their production is also bogged down by delays and regulatory bottlenecks.
It takes up to 15 years to build a mine despite Canada holding some of the world’s largest deposits of critical minerals. That is an unacceptable timeframe in a polarizing, competitive global market.
Shortening this timeline and streamlining project approvals would position Canada as a leader in critical minerals production, as it should be.
Canada finds itself at a time to choose where it wants to go. It can remain handcuffed to climate goals from 2015 and ensure the country is always a step behind economically and vulnerable to an unpredictable American government.
Had Trudeau and many of the premiers prioritized critical infrastructure, our access to diversified markets would have given Canada a far stronger hand.
Canada’s economic position would be far more secure. Instead, we now face Trump’s tariffs with few tools to defend the economy.
Trump’s plans would devastate Canadian industries that rely on exports to the U.S. since the dawn of free trade in the 1980s, and consumers will feel the painful sting. It is not Canada’s business to lecture the White House on protectionism, but it is vital to recognize where we stand and commit to an all-hands-on-deck approach to defending our economy.
As disastrous as the tariffs may become, they should be taken as an opportunity. Canada needs bold leadership that will prioritize our economic security, and the path to that runs through our natural resources.
If Canada can play the main character in anything, it is the resource sector. We can be a reliable and resilient supplier of energy and critical minerals to our allies. The pain caused by Trump’s tariffs, or even the thought of it, should be a wake-up call for Canada’s leaders.
They can make the choice to slash red tape and make speeding up our critical infrastructure projects one of their top priorities. Without that choice, Canada’s economic security and competitiveness in the world will be at risk.
Bold action is needed to turn this potential crisis into an opportunity for growth.
National Post