Ontario Premier Doug Ford issued a stark warning on Wednesday, threatening to cut off energy supplies to the United States if President-elect Donald Trump follows through on his proposed tariffs on Canadian goods, CBS News reports.
The statement underscores the escalating tensions between Canada and the US as the prospect of a trade war looms.
“We will go to the full extent 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,” Ford said after a virtual meeting with Prime Minister Justin Trudeau and other provincial premiers.
Trump’s November threat to impose a blanket 25% tariff on all products from Canada and Mexico unless drug and migrant flows are curbed has galvanized Canadian action. The federal government is considering spending over $700 million to bolster border security, increasing staffing and acquiring equipment like helicopters and drones.
Ford revealed that Ontario, along with the federal finance minister and other provinces, will compile a list of US goods targeted for retaliatory tariffs.
Analysts warn that a trade war would severely damage both economies. Canada is a major supplier of natural gas and approximately 20% of the crude oil consumed by the US GasBuddy’s head of petroleum analysis, Patrick De Haan, predicts a potential 30-70 cent per gallon increase in US gas prices if tariffs are implemented. Ontario’s significant electricity exports to Michigan, Minnesota, and New York, powering 1.5 million US homes in 2023, are also at risk.
The potential consequences extend beyond energy. Midwestern states, particularly Michigan and Illinois, face significant risk. These states rely heavily on imports from Canada, Mexico, and China, with these imports accounting for 19% and 12% of their respective GDPs, according to Fitch Ratings. Michigan’s auto industry, producing nearly 19% of US vehicle sales, is particularly vulnerable to disrupted cross-border trade. Illinois, home to a major crude oil refinery, is heavily reliant on Canadian oil supplies.
Economists forecast a potential Canadian recession in 2025 if tariffs are imposed, triggering inflation and forcing the Bank of Canada to halt planned interest rate cuts. Oxford Economics’ Michael Davenport highlights the energy, auto, and heavy manufacturing sectors as most vulnerable due to their high degree of cross-border trade. This isn’t the first time the two countries have clashed over tariffs. During his first term, Trump imposed tariffs on Canadian steel and aluminum, prompting Canada to retaliate with duties on US goods, including Wisconsin-produced whiskey and yogurt.
