(Bloomberg) -- The leader of Canada’s largest provincial economy wants to take his argument against tariffs directly to the Trump administration — making the case that China would be the main beneficiary if North American countries become engulfed in a trade war.
Ontario Premier Doug Ford said he’s eager to strike a deal that will see the US gain more access to Canada’s critical minerals and energy, giving the world’s biggest economy an edge in strategic industries where it has fallen behind China.
President-elect Donald Trump’s threat to place 25% tariffs against goods from Mexico and Canada has upended the relationship between the North American trading partners and caused both US neighbors to scramble for a response.
Broad tariffs would hurt Ontario’s economy more than some other Canadian regions. The province of 16 million people is the heart of the country’s financial and manufacturing industries, with an automotive sector that is tightly integrated with plants in Michigan, Kentucky and other states.
“The only people that win is China on a disagreement between Canada and the US,” Ford said in an interview in Toronto.
If Trump follows through with punitive tariffs, Canada may have no choice but to retaliate, the premier said.
Ford, 60, caused a stir last week when he suggested Canada may reduce energy supplies to the US if Trump starts a full-scale trade war. The two countries have a trade relationship that’s worth more than $900 billion a year.
“Depending how far this goes, we will go to the extent of cutting off their energy, going down to Michigan, going down to New York state, and over to Wisconsin,” he told reporters. Canada is the largest external shipper of crude oil to the US and also supplies natural gas, electricity and other commodities.
In the interview with Bloomberg, Ford pointed out that Canada has “the critical minerals that they need for their manufacturing, for their military.” China recently banned the shipment of certain key materials, such as gallium and germanium, to the US.
Canada shipped 59% of its critical minerals exports to the US in 2023, representing about C$29.8 billion ($20.7 billion). In turn, the majority of US imports of aluminum, uranium and potash come from Canada, according to US government data.
Every Tool
Since winning the US election, Trump has taunted Canadian Prime Minister Justin Trudeau with jibes about the northern country being the 51st state, falsely claiming the US subsidizes Canada to the tune of $100 billion a year.
The US trade deficit in goods and services was about $41 billion last year, according to the US Census Bureau, driven largely by American purchases of Canadian energy. Refineries in the US Midwest are particularly large customers of Canadian oil companies: Fuel makers in the region rely on Canada for 46% of the crude they turn into gasoline and diesel.
Trump is “not putting a tariff on that oil, no matter what,” Ford said. But that leaves Canada with a dilemma on how to respond if the US administration hits Canadian-made cars, aerospace parts or other key goods.
The Canadian government is considering export taxes or controls on key commodities needed by the US, including uranium, if it needs to apply pressure to the Trump administration, Bloomberg reported last week. It would be a last resort, officials said.
Ford reiterated that Canada can use energy exports as a point of leverage in negotiations — “I’ll use every tool in my toolbox to protect Ontarian and Canadian jobs” — but “it shouldn’t get to that point.”
Andrew Furey, premier of the oil-rich province of Newfoundland and Labrador, said Canada will have to be “very tactful and very strategic” in how it deals with the White House on trade. And it must consider differences within the country as it decides how to respond. Seafood and oil and gas, for example, are critical to his province’s economy.
“I would argue that our energy exports are our queen in this game of chess,” Furey said. “Putting energy on the table immediately, in what will be a negotiation, is not in Canada’s best interest.”
Trudeau Turmoil
Both premiers said they are optimistic Canada can present a united front in negotiations, despite the political instability within Trudeau’s government.
The country was rocked by the surprise resignation of Finance Minister Chrystia Freeland on Monday. She had a key role in planning the government’s strategy to deal with Trump, but said she and the prime minister were “at odds about the best path forward for Canada.”
Trudeau named as her replacement veteran politician Dominic LeBlanc, who accompanied Trudeau on a visit to Trump’s Mar-a-Lago resort in late November. Both Ford and Furey praised LeBlanc’s appointment.
“He’s a smooth operator and understands perhaps better than anyone the power of personal capital in that space,” said Furey, who has known LeBlanc for three decades.
Dozens of lawmakers from Trudeau’s Liberal party want the prime minister to step down. Asked whether Trudeau should resign, Ford said that will be up to the leader and his caucus, as well as the New Democratic Party, which has been keeping Trudeau’s government alive by supporting it on key votes.
--With assistance from Mathieu Dion and Jacob Lorinc.
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