The tariffs are coming. Not today, but perhaps on Feb. 1. That’s what U.S. President Donald Trump suggested on Monday, after his inaugural address.
Trump’s speech made scant mention of tariffs, only that he would be establishing an “external revenue service” that would “tariff and tax foreign countries to enrich our citizens.”
The comment came later, when Trump spoke to reporters in the Oval Office. “We’re thinking in terms of 25 per cent (tariffs) on Mexico and Canada because they’re allowing vast numbers of people … and fentanyl to come in,” he said. “I think we’ll do it Feb. 1.”
Cue the response from Prime Minister Justin Trudeau. At his cabinet retreat in Montebello, Que., Trudeau said, “Our response will be robust and rapid and measured, but very strong. The goal will be to get those tariffs off as quickly as possible.” He reiterated that Ottawa’s goal is still to avoid tariffs, but if they come, “everything is on the table.”
But Trump’s agenda is also important on two other fronts, which have received less attention than the tariff threat but are critically important to the Canadian economy: the environment and energy, along with diversity equity and inclusion (DEI), both of which are receiving a radical overhaul under the new administration.
Trump didn’t just pause the energy transition, he reversed it by scrapping Joe Biden’s Green New Deal and pulling the U.S. out of the Paris Agreement. Trump said he wants to ramp up U.S. oil production and export it overseas. The availability of cheap oil could stall the global energy transition by giving other countries little incentive to decarbonize. And this could be bad news for Canada.
For starters, it could mean lower prices for Alberta oil. It’s true that many U.S. refineries will still want our heavy crude, which they process and sell back to us. But if cheaper domestic sources become available, or if more oil is produced overall, the law of supply and demand means that prices in general will decline.
Prices already fell on Trump’s first day in office. Trump declared a “national energy emergency” and promised to “bring prices down, fill our strategic reserves up again, right to the top, and export American energy all over the world” — all of which could mean less revenue for Canada.
On the environmental front, Trump’s 180 means that Canada will have to match America’s new rules to compete for investment. That means saying bye bye to the carbon tax, emissions caps, EV mandates and strict environmental regulations.
We could keep them, of course, but we would suffer serious economic consequences with little benefit. Canada currently produces less than 1.5 per cent of global CO2 emissions, and if our neighbour starts pumping out more, all the taxes we pay won’t make a whit of difference to the fight against climate change.
The second impact will come from the death of DEI. Even prior to Trump’s return to office, American companies were dumping DEI in droves: Amazon, Meta, Walmart, McDonald’s, Boeing, Ford and John Deere all scrapped their programs in the last six months. On Monday, Trump revoked all “radical and wasteful” federal DEI programs by executive order.
This will affect Canadian companies in several ways. American parent companies may feel pressured to dump DEI policies in their Canadian subsidiaries, so as not to run afoul of the new American ethos, and to remain competitive.
Trump could also turn these policies into a bargaining chip in his trade and tariff negotiations. And they could spur a new brain drain: Canadian talent who want to operate in a non-DEI environment may choose to head south, where they will have greater opportunities for advancement.
So while Canadians might breathe a short-lived sigh of relief that tariffs won’t hit us for another 10 days, Trump’s “golden age” has far greater implications for Canadian business, consumers and taxpayers. If we don’t want to end up in a dark age, we had better pay attention.
Postmedia Network
Tasha Kheiriddin is Postmedia’s national politics columnist.