Canada is in that awkward position where a usually friendly, if erratic, neighbor has suddenly started hammering on the walls. Should it politely ask them to lay off or bang back? In dealing with President Donald Trump’s threat of U.S. economic warfare, Canada’s approach is especially tricky when it comes to the biggest battlefield: energy.
Canada’s energy exports to the U.S., especially oil, flip what would otherwise be a U.S. trade surplus to a Trump-troubling deficit. As I earlier wrote here, the two countries’ oil industries are tethered together by pipelines in a peculiarly symbiotic and rewarding relationship. Canada has limited outlets for its oil exports other than U.S. refiners in the Midwest, and those same refiners lack other options for getting the heavy, sour crude oil they like and which Canada produces in large quantities. This is energy codependence.
That means if Trump imposes his threatened, if delayed, tariffs, some of the burden will blow back on the U.S. Thus, energy offers Ottawa its most obvious potential source of leverage. This is especially obvious because Trump, ever the artful dealmaker, signaled so by setting a lower tariff for Canadian energy, 10% rather than the 25% level for other imports.
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