Doug Ford threatened to stop energy exports to the U.S. How would it work?
Ontario Premier Doug Ford responded to the burgeoning trade tension between Canada and the United States with a threat that the province could cut off energy exports to the U.S. in retaliation to president-elect Donald Trump’s threat of sweeping tariffs.
But what would it look like if Ontario and other provinces carried out that threat?
Some experts say Canada doesn’t have much room to work with when it comes to potential retaliation.
On Wednesday, Ford along with other Canadian premiers met with Prime Minister Justin Trudeau to discuss the 25-per cent tariffs Trump has threatened to impose on all Canadian imports on his first day in office, which will be Jan. 20, 2025.
After the meeting, Ford offered a threat of his own: to “cut off” millions of American residents living in border states from Ontario’s energy exports.
A map of Canada with the biggest export for the provinces and territories. Donald Trump says he will sign an executive order imposing a 25 per cent tariff on all products coming in to the United States from Canada and Mexico.
“It would turn off the lights to a million-and-a-half Americans,” Ford said. “If they come at us we have to stand up for Canadians, we have to stand up for Ontarians.”
A spokesperson for Independent Electricity System Operator (IESO), Ontario’s energy regulator, said discussions are currently taking place.
“There are active discussions underway with government about this matter and the IESO is not in a position to comment at this point in time,” IESO spokesperson Andrew Dow told Global News in a statement.
Drew Fagan, a professor at the Munk School of Global Affairs & Public Policy, said Canada may have more to lose from an energy war than the United States.
“I’d be very careful about trying to get into a full war where they have a gun and we have a knife,” Fagan said.
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Fagan said risking a trade war with the U.S., particularly in the energy sector, could jeopardize Canadian jobs.
Canada’s two biggest exports to the United States are crude oil and motor vehicles. Donald Trump says he will sign an executive order imposing a 25 per cent tariff on all products coming in to the United States from Canada and Mexico.
“Tit-for-tat means we will damage our economy far more than we will damage their economy. And that means (a negative impact on) economic growth and jobs. And when we’re talking about the energy sector, we’re talking about good, high-paying jobs,” he said.
Last month, Global News reported that according to documents filed with the B.C. Utilities Commission, BC Hydro imported 13,600 gigawatt hours of electricity in fiscal year 2024, at a cost of nearly $1.4 billion.
Much of the power came from the U.S. and Alberta, where it was generated by burning fossil fuels.
While three U.S. states — primarily Michigan and New York, but also Minnesota — receive Ontario energy, it does not account for the majority of their energy consumption.
According to IESO data, Ontario sent 7,718 gigawatts of power to Michigan. However, the state produced 120,656 gigawatts of electricity domestically.
New York had similar figures, producing 124,039 gigawatts domestically and importing 4,149 gigawatts from Ontario. Minnesota received 66 gigawatts from Ontario last year.
One premier who doesn’t share Ford’s enthusiasm for cutting off energy exports to the United States is Alberta Premier Danielle Smith.
Fagan said, “She (Smith) wouldn’t take that step because it would be something close to economic Armageddon for her economy. It’s interesting that Premier Ford didn’t suggest cutting off cars. He suggested a product that is important (to Ontario) but secondary.”
On Thursday, Smith said, “Under no circumstances will Alberta agree to cut off oil and gas exports.”
“I don’t support tariffs on Canadian goods and I don’t support tariffs on U.S. goods. Because all it does is make life more expensive for everyday Canadians and everyday Americans,” she said.
As of 2022, Canada’s biggest export to the United States in terms of value was crude oil, worth $152.6 billion. According to Statistics Canada, the U.S. accounted for 97.4 per cent of Canada’s crude oil exports, with Alberta contributing to 87.4 per cent of the total volume exported to the U.S.
Is Canada ready for a broader tariff war?
Fagan cautioned that a tit-for-tat trade fight with the United States may not be contained to the energy sector.
“What if they retaliate to his retaliation by doing something with regard to cars, which is a much bigger part of the Ontario economy?”
Ontario is the highest-value exporting province to the United States, with its exports to its southern neighbour amounting to an annual $220.5 billion. Ontario’s highest-value export is motor vehicles, amounting to $36 billion, followed by gold at $17.66 billion.
With conflict in the Middle East and in Eastern Europe currently raging, Fagan said Canada could pitch itself as the best bet for meeting U.S. energy needs.
“Who do you want to buy from? You want to buy from Canada. We should be doing more trade, not less, in all forms of energy,” he said.
Fagan said a larger trade war would hurt Canada more.
“The Canadian economy is roughly the size of New York State. There’s a huge imbalance,” he said.
© 2024 Global News, a division of Corus Entertainment Inc.
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