Mark Carney, the former central banker who’s running to lead Canada, said the government should be open to curbing electricity exports to the U.S. if it needs to retaliate against tariffs from the Trump administration.
“It’s not the first card” to play in a trade war, Carney said during an interview with Radio-Canada, the French-language public broadcaster. But any negotiation with the U.S. will be “very tough,” he said, suggesting the Canadian government needs to keep its options open.
The provinces of Quebec and Ontario are important exporters of electricity, sending power south to states including New York. The western provinces of Alberta and Saskatchewan are huge suppliers of oil, gas and uranium to U.S. refineries and utilities.
Restricting the flow of energy to the U.S. is one measure being discussed in Canada in the event of a trade war, but it’s controversial. The premiers of Alberta and Saskatchewan have said they’re against moves to curb energy sales to the U.S., which are the primary source of the U.S.’s trade deficit with Canada.
Canada produces more than half of the crude oil that’s imported by the U.S. — some 4 million barrels a day. Excluding energy, the U.S. has a trade surplus with Canada, according to U.S. government data.
U.S. President Donald Trump has threatened to put 25 per cent tariffs on goods the U.S. buys from Canada, perhaps as early as Feb. 1. That would hurt the Canadian economy at a time when the national government is in the midst of a leadership change.
Members of the governing Liberal Party will select a new leader on Mar. 9 to replace Prime Minister Justin Trudeau. Carney and former Finance Minister Chrystia Freeland are the biggest names in the race, and both have called for strong retaliation if Trump imposes tariffs.
In the Radio-Canada interview, Carney promised to bring back balanced budgets, but said he would allow the government to run small deficits occasionally to boost the economy and the private sector.
“The government spends too much, but doesn’t invest enough,” he said, adding that he would reduce expenses and seek to find efficiencies in the public sector.
Freeland, who earned Trump’s ire as the leader of the Canadian side during the North American trade negotiations in 2017 and 2018, said in an interview on Radio-Canada talk show Tout le monde en parle that Trump is a “bully.”
As prime minister, she said she would fight back with a list of a retaliatory measures. Canada has no choice but to “play Trump’s game,” she said.
Freeland is also calling for an international summit to hammer out a joint response to Trump’s tariff and sovereignty threats.
She said if she’s chosen as leader of the governing Liberal party, she would hold a summit — bringing together leaders from Mexico, Denmark, Panama and the European Union — the day she’s sworn in as prime minister.
The coalition would “coordinate a joint response to challenges to our sovereignty and our economies,” she said in a statement.
— With additional reporting from Randy Thanthong-Knight, Bloomberg
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