Canada's provincial capital on Wednesday threatened to cut energy supplies to the US if President-elect Donald Trump implements his tariffs on Canadian goods. This bold move highlights the growing tension between the two countries as they engage in a potential trade conflict.
“We'll go to the full extent of how far this goes. We'll go to the extent of cutting off their energy, going down to Michigan, going down to New York State and over to Wisconsin,” Ontario Premier Doug Ford said during her press conference after a virtual meeting with Canadian Prime Minister Justin Trudeau and other top regional officials to discuss Trump's tariff threat. “I don't want this to happen, but my No. 1 job is to protect Ontario, Ontarians and Canadians as a whole because we are the largest province.”
Trump in November threatened add a total tax of 25%. on all products from Canada and Mexico unless both countries act to stop the flow of drugs and illegal immigrants into the US
The Canadian government said it was considering spending the equivalent of more than $700 million to better protect the border. To prevent new US tariffs, the plan would increase the number of officers and buy additional equipment, such as helicopters and drones, to tighten border crossings.
Ford said his province, Canada's federal finance minister and other provinces will compile a list of items on which the country could impose retaliatory tariffs against the US
“We have to be ready to fight. This fight is 100% coming on January 20 or January 21,” he told reporters, referring to Trump's inauguration date, “and it's not We know how far this fight is going.
Both Canada and the US lost
Analysts warn that dueling tariffs would harm the US and Canadian economies. Canada supplies the US with natural gas and about 20% of the crude oil used by its southern neighbor. Patrick De Haan, head of petroleum analysis at GasBuddy, has forecast US gas prices it could jump from 30 to 40 cents a gallonand possibly up to 70 cents, shortly after Trump's tariffs take effect.
There could be serious risks in mid-western states especially if Trump's plan for tariffs on Canada, Mexico and China is implemented.
Michigan and Illinois rely heavily on imports from Canada, Mexico, and China, which make up 19% and 12% of their state GDPs, respectively, according to analysts at Fitch Ratings Group. Michigan, which produces nearly 19% of vehicles sold in the US, is particularly dependent on cross-border trade. Meanwhile, Illinois, which is home to the fourth largest crude oil refinery in the country, gets most of its crude oil from Canada.
“If implemented exactly as proposed, the broad tariffs proposed by President Trump could cause a significant economic shock with tariff levels rising to levels not seen in the US since the Great Depression,” according to the study. recently by Fitch.
Experts also warn that tough US tariffs would likely push the Canadian economy into recession by 2025, causing a spike in inflation and forcing the Bank of Canada to hold off on interest rate cuts next year – year. According to a recent report from Michael Davenport, an economist with Oxford Economics, Canada's energy, automotive and heavy manufacturing sectors would be hit hardest due to the high level of cross-border trade in these industries.
“The 25% US tariffs combined with proportional retaliatory tariffs would reduce Canadian exports and cause its GDP to fall 2.5% top-to-bottom by early 2026. Inflation rose to 7.2 % by mid-2025, and 150,000 layoffs would raise the unemployment rate to 7.9% by the end of the year,” said Davenport.
During his first term in office, Trump imposed tariffs on Canadian steel and aluminum exports. Canada retaliated with its own duties on US products such as whiskey and yogurt coming from a plant in Wisconsin.
