Commentary
Battles between provinces and the federal government are part of Canada’s fabric. Politically, it serves premiers well if they can position themselves as defenders against Ottawa’s incursions upon provincial jurisdiction. Federal governments try to frame themselves as defenders of the federation over perceived, self-interested regions.
The current battle between Alberta Premier Danielle Smith and Prime Minister Justin Trudeau, however, is more than a typical boxing match between the regions. Canada’s economy and unity are at stake.
When incoming U.S. President Donald Trump first proposed imposing a 25 percent tariff on Canadian goods, many dismissed it as an idle threat or posturing on his part. But as Trump’s inauguration date approaches, it’s becoming all too clear he intends to follow through with the tariffs and potentially drive Canada into a recession. Canada is an export-based nation, with over 76 percent of those exports going to the United States. A 25 percent tariff would be devastating.
Trudeau has been trying to build a “Team Canada” with the premiers to create a united approach to negotiating with Trump. Smith has been acting unilaterally in meeting with state governors and Trump herself. Both approaches have merit, but if the two leaders don’t find a way to work together, the trade war may become protracted without need.
Smith has good reason to be wary of the federal approach. Foreign Affairs Minister Melanie Joly has indicated that cutting shipments of Canadian oil and gas products was on the table as a tactic in the looming trade war. Older Albertans remember the last time the federal government meddled with Alberta’s energy sector with export tariffs and price controls. Pierre Trudeau’s National Energy Program in 1981 ravaged Alberta’s economy causing investment to flee, bankruptcies to spike, and provincial losses between $50 billion and $100 billion. Western separatism surged and a separatist MLA was even elected to the Alberta legislature. Ironically, this generation faces another Trudeau offering a similar policy move.
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Justin Trudeau faces limited options in applying leverage against the United States in a trade war. Energy products offer the most immediate trade good that would impact American consumers. If exports were curtailed or had tariffs applied to them, it would cause price shocks at the gas pumps and refineries of the USA. Businesses and citizens would quickly start pressuring President Trump to negotiate with Canada. When policies visibly impact the pocketbooks of citizens, the backlash is swift. Will Trudeau dare to risk tearing Canadian unity wide open by interfering with Alberta’s economy?
The best scenario for both Alberta and Canada right now is for Trudeau and Smith to find some common ground and work together to avoid a trade war. As unlikely as such an alliance may seem, it must happen for the sake of all Canadians. The threat to the economic well-being of Canada transcends the personal pride or political points to be scored by the leaders.
If Smith’s negotiations with American counterparts manage to get oil and gas products exempted from tariffs, it would protect Alberta’s economy but cause turmoil across the country as other provinces reel under export tariffs. The pressure on the federal government to intervene would be fierce. If Smith doesn’t get Alberta’s energy exports exempted, Alberta will suffer dearly. Neither scenario looks good.
While closed-door meetings can foster distrust among citizens, perhaps it’s time for Smith and Trudeau to have one. They can set aside the public posturing and try to hash out solutions to the looming crises. If Canadian energy products are to be used to apply pressure on Trump, those products should include hydro-electric exports from Quebec and the Maritime provinces rather than just targeting Alberta’s exports. If Smith and Trudeau mused about such things in public, it would be akin to poking a hornet’s nest as every province goes haywire. If they could come up with such a plan privately and impose it quickly in response to American tariffs, though, it could greatly curtail the length of what could be a long and costly trade war.
If Canada doesn’t have a unified approach to responding to incoming tariffs, there will be no fast resolution to the dispute. While a “Team Canada” approach sounds good in principle, there will never be unity to be found with 10 premiers in a room at the same time.
Justin Trudeau is in the twilight of his political career. It would be a great legacy point for him if he could settle a trade war in his final months in power. To do so, though, he must find a way to work together with Danielle Smith. Likewise, Smith must become receptive to working with Trudeau, if only on this issue.
If tariffs are applied across the board on Canadian goods, Canadian leaders will be quickly motivated to work together to end the crisis. If Trudeau and Smith could work together, though, Canada’s response could be proactive rather than reactive. Team Trudeau and Smith may sound odd, but politics makes strange bedfellows.
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
