In Canada’s oil-rich province, Alberta, there is a deep sense of unease over President-elect Donald Trump’s threat to impose a 25% tariff on Canadian goods.
Canadian politicians and energy experts warn that higher tariffs will have negative effects on the economy of America’s northern neighbor – as well as raising prices for American consumers.
“Canada has no choice in this,” Dennis McConaghy, Alberta’s former energy chief, told the BBC.
“It should find a place to stay with Trump.”
Trump announced on Monday that, when he takes office in January, he will impose tariffs on Mexico and Canada – despite the proposal excluding oil and gas.
Lisa Baiton, president and CEO of the Calgary-based Canadian Association of Petroleum Producers, said the tax could mean Canada produces less oil.
Mr McConaghy said that would lead to job losses in Alberta, with potential ramifications for Canada as a whole, as poorer provinces rely on transfers from wealthier provinces – like Alberta – to help cut costs and provide social services.
It could also lead to a weaker Canadian dollar at a time when the currency is already struggling due to domestic economic conditions, he said.
“Remember, about 80 percent of Canada’s trade is with America, and most of that trade is in hydrocarbons. Canadians cannot escape the way they are integrated into the US.”
American oil producers have also urged Trump to exclude oil and gas from any proposed sanctions if Americans rely heavily on Canadian oil imports.
“Crude oil is to refining what flour is to bakeries,” the industry group American Fuel and Petrochemical Manufacturers (AFPM) said in a statement this week.
“Our starting material and input costs. If those food commodities were to become more expensive, so would the total cost of making gasoline here in the United States.”
The US is the largest producer of crude oil and natural gas in the world, but some regions – California, the Northeast and parts of the Midwest – do not have the infrastructure or pipeline capacity to rely solely on US oil and need imports to supply fuel to consumers. .
About 40% of US oil refining is imported, and most of it comes from Canada.
Canadian oil is relied upon primarily in the landlocked Midwest, where it is refined to process Canada’s heaviest blends.
AFPM said there is no easy fix for that corruption other than relying on overseas sources that could destroy US energy security.
An industry group has warned that the Canadian oil tax will raise the cost of operating in the Midwest – a cost some experts say will be passed on to consumers.
Patrick De Haan, a Chicago-based gasoline price analyst, estimated that states like Minnesota, Wisconsin and Michigan could see gas prices increase by 75 cents a gallon.
Mr De Haan noted in a post on X, formerly Twitter, that these higher prices would not only be felt at the tap, but could increase costs for airlines and freight forwarders.
Rising oil prices for American consumers will counter Trump’s promise to lower energy costs.
During his campaign, Trump always said he planned to reduce the price of petrol to below $2 (£1.57) a litre. As of late November, the price of regular gasoline in the US remained around $3 a gallon.
But Trump has also vowed to increase America’s energy independence by boosting domestic drilling and reducing dependence on foreign oil and gas, especially in countries outside the US.
It is unclear whether the tariffs will be implemented, analysts said, as Trump has been known to use these threats in the past as a negotiating tactic to achieve certain goals.
In this case, Trump may be using tariffs to get Canada and Mexico to cooperate on border security.
Trump has signed that the levies will remain in place until Canada and Mexico work to secure the borders shared with the US, reduce the number of illegal immigrants and drugs entering the country.
Prime Minister Justin Trudeau promises to launch a joint team of “Team Canada” and work with the incoming Trump administration to avoid tariffs.
Leaders of Canada’s largest provinces such as Ontario, Quebec and Alberta urged Trudeau to act quickly on these demands, and on Wednesday, Trudeau held an emergency meeting with provincial and territorial leaders to discuss how to move forward.
Danielle Smith, the premier of Alberta, said her province will “work hard” in the coming months to communicate with American partners and convey the message that a strong relationship with Canada will help the US and its energy security.
He said that in his view, Trump “and the tens of millions of Americans who voted for him have legitimate concerns” related to border security.
He and other prime ministers, Smith said, have asked Trudeau to come up with a comprehensive plan for border security.
Smith also said the state is considering the option of creating special sheriff’s units to patrol its shared border with the US state of Montana.
Either way, Mr McConaghy said he hoped there was an urgency among Canadian officials to get the tax risk “off the table as quickly as possible”.
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