If President-elect Donald Trump threatens to impose tariffs on Canadian products, Ottawa is prepared to retaliate with tariffs that could target the energy sector, Canada’s International Trade Minister Mary Ng said Thursday.
“Everything is on the table,” Ng told global markets reporter Seema Mody on CNBC’s “Squawk on the Street.”
This includes dollar-for-dollar retaliation. Canada’s trade minister also refused to exclude export taxes on Canadian oil and gas destined for the United States.
“I actually don’t think the American people want us to not sell electricity, oil and gas to the United States because, you know, I’m here in New York and most of the lights on Broadway are Canadian electricity,” Ng said.
“Imposing tariffs on Canada would actually make things more expensive for Americans,” she added.
When President Trump took office Monday, he threatened to impose a blanket 25% tariff on all Canadian exports. This threat is similar to the threat to Mexico, which is a three-party party to the USMCA trade agreement. President Trump also discussed raising tariffs on Chinese imports by 10%.
Canada and the United States have a virtually unrivaled trade relationship. In 2022, Canada was the largest buyer of U.S. goods and the third largest exporter of goods to the United States.
Ng and her team are currently drafting a list of U.S. exports to Canada that could lead to additional tariffs if trade tensions escalate. “Everything will be on the table,” she said.
U.S. President Donald Trump and Canadian Prime Minister Justin Trudeau shake hands during a meeting ahead of the NATO summit held in Watford, London, England, on December 3, 2019.
Kevin Lemarque | Reuters
The same goes for Canadian goods imported into the United States.
“If you buy something at the supermarket… think of a candy bar, they probably have Canadian ones, so if you pay $4 today, you might pay $5 tomorrow,” Ng said.
The potential threat of an imminent trade war with the United States has prompted Ottawa to continue working with the rest of its trading partners around the world, including Japan and the European Union.
“I’ve always been tasked with diversifying as Trade Canada,” Ng told CNBC. “It’s great to be working with the United States, but absolutely we have to pursue opportunities around the world, and we do.”
This is not the first time President Trump has used the threat of tariffs to restart trade talks with America’s northern neighbor.
During his first term, Trump imposed tariffs on Canadian steel and aluminum exports to the United States.
The move prompted Ottawa to announce retaliatory levies on American products such as beef, chocolate and ketchup.
At the time, Canada did not hide its selection criteria for imposing additional tariffs on U.S. exports. Prime Minister Justin Trudeau’s government has deliberately chosen products from politically powerful places, such as battleground states or places with strong representation in parliament.
The idea was that the negative economic impact of reduced exports would be felt most acutely by people in the communities that make or grow the products. They, in turn, will put additional pressure on elected representatives in Washington, including Trump, who is running for a second term, to resolve tensions.
U.S. President Donald Trump welcomes Canadian Prime Minister Justin Trudeau at the White House in Washington, U.S., June 20, 2019.
Yuri Grypas | Reuters
This time, Ng said, Canada is looking to “find more common ground” before expanding. She also said Ottawa is working to make the border between the United States and Canada more secure. This could help Trump deliver on a key promise he made on the campaign trail.
“I think we have a very unique opportunity right now for Canada and the United States to work together to build a much stronger economy, a stronger North American economy,” Ng said.
Canada’s ambassador to the United States, Kirsten Hillman, told The Associated Press on Monday that increasing such cooperation could include purchasing more products from the United States. Hillman said 70 per cent of Canada’s military equipment is sourced from the United States.
As for buying more military equipment, Ng told CNBC that “everything is on the table” from fighter jets to drones.
Canada is currently in the midst of a leadership reorganization. Prime Minister Justin Trudeau resigned earlier this month. Trudeau’s resignation comes just weeks after his former ally and deputy prime minister, Chrystia Freeland, also resigned.
In announcing his resignation, Freeland, who is also Canada’s finance minister, cited differences with Prime Minister Trudeau over the direction of Canada’s trade policy toward the United States.
