Canada weighs retaliation options as S. tariffs take effect
Eighteen months into the S. trade war, Prime Minister Mark Carney faces the same dilemma his predecessor did at the outset of the conflict: how to retaliate against a powerhouse economy without shooting yourself in the foot. After S. President Donald Trump imposed 50-per-cent tariffs on roughly $28-billion of Canadian exports to the United States, Mr. Carney vowed to fight back with dollar-for-dollar tariffs on S. imports set to take effect on Sept. 8. The government plans to announce its response to the tariffs on Tuesday, but has yet to release details of what products will be targeted, reviving a guessing game among trade watchers that led up to former prime minister Justin Trudeau’s imposition of broad-based retaliatory tariffs in March 2025.
Several experts suggest that dusting off the tariff playbook pursued by Mr. Trudeau might be a wise move. Consumer products bore much of the brunt when the federal government first slapped countertariffs on $30-billion worth of American goods in the first round of its response last year. Joseph Steinberg, a University of Toronto professor specializing in international economics and trade policy, said that approach is likely to impose the least harm on the Canadian economy. Putting more focus on manufacturing inputs would have raised production costs for Canadian businesses and potentially caused broader economic damage, he said. But he noted the downside: “Those who are the most price-sensitive,” the lowest-income people in the country, bear the brunt of consumer tariffs.
C. Premier David Eby is pushing Mr. Carney to embrace retaliatory trade war tactics other than tariffs, including walking away from the purchase of American fighter jets and hampering the shipping of Montana’s thermal coal through a port south of Vancouver. At a press conference in Vancouver, Mr. Eby said federal supports for workers affected by the latest round of S. tariffs are a “good start,” but Ottawa’s response is missing key elements. He specifically mentioned revisiting the planned $12-billion purchase of F-35 fighter jets and reviewing the exporting of thermal coal from the S. through the Westshore port in Delta, , after which it is shipped to East Asia, where it is burned to generate electricity and industrial heating. Mr. Eby said his province plans to soon provide a list of other levers it and the government of Canada can pull to hurt the Trump administration. “At this point, the ones that I feel comfortable talking about are both exclusively in the federal jurisdiction but have impacts on : the coal trains from the S. that go out through [Westshore], and the plan to spend $12-billion on a country that just kicked us in the back,” he said, standing in a government liquor store before shelves bereft of American alcohol.
Experts weigh in on the non-tariff measures. Kathryn Harrison, a political science professor at the University of British Columbia, said curtailing coal exports would align with former prime minister Justin Trudeau’s 2021 campaign promise to phase out its export by the decade’s end. John Steen, director of the Bradshaw Research Institute for Minerals and Mining at UBC, said a tax or ban of these exports wouldn’t hurt Canadian allies South Korea and Japan because they could find more supply from Australia. James Brander, a professor emeritus of UBC’s strategy and business economics division, said enacting such a policy would be a big escalation of the trade war.
Meanwhile, the CEO of Trans Mountain Corp. warns against using energy as leverage. Mark Maki said disrupting southbound oil exports in retaliation for S. tariffs is not viable and would have serious consequences for Canada. “Interdependencies between both countries are high,” he said in an interview following the release of the Crown corporation’s second-quarter results, which saw its pipeline to the Vancouver area running 94 per cent full. “I hope people put down the shovels here pretty quick. We’re hitting each other and we’ve got to stop that.” Maki said taking that path would be a version of “mutually assured destruction” — a Cold War-era concept whereby a nuclear strike by one superpower against the other would trigger retaliation so devastating that both sides would end up annihilated. “It’s highly destructive to both parties,” he said.
Trans Mountain’s pipeline, with a capacity of 890,000 barrels per day, provides the only meaningful avenue for Canadian crude to reach S. markets. Almost two-thirds of the oil that moves through the line goes to Asia via tanker, with some also serving the C. Lower Mainland and the S. Pacific Northwest. Washington State refineries get about a third of their supply from Canada; during the second quarter, an average of 234,000 barrels per day were delivered to that market on Trans Mountain’s system. Even with expanded international access, the links between Canada and the S. remain deep, Maki said.
So far, energy has not been part of the equation in the latest trade flare-up. But the debate over how far Canada should go in its retaliation continues, with Mr. Carney expected to announce the details of his response on Tuesday.