President Donald Trump had a busy first day back on the job.
From his desk in the Oval Office, Trump signed executive orders on energy and regulation with major implications for Canada. He’s rejected the primacy of a regulatory state (in favour of the legislative state), put a lock on the growth of U.S. regulation and launched regulatory and cost controls.
Essentially this means the U.S. will systemically deregulate while Canada is regulating its economy ever more heavily and broadly, making our economy even less competitive with the U.S.
Trump has also put paid to the fallacy of the great electric vehicle (EV) transition by pulling the plug on the U.S. EV mandate and federal consumer subsidies for EVs. Of course, now that the U.S. will not mandate EVs in large numbers, the massive investments Canada has made in EV and battery technology and manufacturing — on the expectation of selling EV parts and vehicles in the U.S. market — will likely see little return.
Trump’s withdrawal (for a second time) from the Paris climate agreement also puts U.S. policy further at odds with Canada. While Canada will spend huge amounts of money to attempt to comply with its climate commitments under the agreement and hurt its energy and natural resource sectors in the process, the U.S. will not. The Trump administration will likely undo many of the things that have been done in the name of implementing the Paris agreement.
Trump‘s declaration of an energy emergency and his call for a massive increase in energy production is also a direct threat to Canada’s energy economy. As we have seen in the past, Americans can move very quickly to increase the supply of oil and natural gas when they put their mind to it and regulations don’t stand in the way. A U.S. energy surge could lead to a flood of oil and gas production pretty quickly, leading the U.S. to need less and less Canadian oil and gas (as Trump has flamboyantly proclaimed).
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Trump also wants to expedite energy project reviews and approvals, the exact opposite of the Trudeau government’s approach, which has frustrated the building of new pipelines and other projects. This will facilitate the Americans’ ability to increase energy and natural resource production at a pace Canada cannot hope to match.
Simply put, setting aside Trump’s threatened tariffs, his Day 1 executive orders pose a serious threat to Canada’s energy and natural resource sectors — which remain a vital source of prosperity and revenue — and merit an immediate response from our federal government.
In an ideal world, Canada would harmonize its policy approach to the U.S. on energy and natural resources, which has been a historical norm. But unfortunately for Canadians, the Trudeau government will likely reject Trump’s policy reforms and continue its pro-administrative state, anti-energy, anti-resource economic philosophy.
And given Prime Minister Justin Trudeau’s recent actions to prorogue Parliament, Trump’s executive order barrage won’t face a meaningful Canadian response for months, letting the U.S. steal a massive march on energy, natural resource and regulatory policy reforms over a Canada sitting on its hands.
Kenneth Green is a senior fellow at the Fraser Institute