Energy export cuts on the table in Canada: what it means for hoteliers

Ontario Premier Doug Ford has been particularly vocal, describing the potential tariffs as a “disaster” that would adversely affect both economies. Ford suggested Ontario could cease energy exports to the U.S., a move that would impact approximately 1.5 million American consumers. “We’ll use every tool in our toolbox, including cutting them off,” Ford says.

However, Alberta Premier Danielle Smith expressed reservations about using energy exports as leverage. Smith warned of a potential “national unity crisis” that such measures could provoke, given Alberta’s significant role as a leading energy supplier to the United States.

The proposed U.S. tariffs are reportedly intended to pressure Canada into enhancing border security and curbing the flow of fentanyl and illegal migration. In response, the Canadian government announced a C$1.3 billion plan to bolster border security, including deploying additional drones and helicopters, as detailed by the Associated Press.

The Canadian Chamber of Commerce has cautioned that such broad tariffs could lead to a domestic recession by mid-year. News reports suggest that in light of these economic uncertainties, the Bank of Canada is expected to reduce interest rates by 25 basis points to 3.00 per cent on January 29, 2025.

Meanwhile, Canadian officials are preparing a list of American products that could face retaliatory tariffs, including orange juice and steel, to target key U.S. industries while minimizing harm to the Canadian economy. This approach aims to apply pressure strategically.

Prime Minister Trudeau has emphasized the importance of a unified national response, stating that no single region should bear the brunt of the repercussions. “All options are on the table,” Trudeau said, referring to the government’s commitment to protecting Canadian interests.

The potential trade conflict highlights the deep economic integration between Canada and the United States, with billions of dollars in goods crossing the border daily. Both nations face significant economic repercussions if the proposed tariffs and retaliatory measures come into effect.