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Ontario’s energy exports: A potential flashpoint in U.S.-Canada relations
As trade tensions escalate between Canada and the United States, Ontario Premier Doug Ford’s recent remarks about potentially cutting off energy exports to the U.S. have sparked significant debate.
With President-elect Donald Trump’s threats of imposing sweeping tariffs on Canadian imports looming, the stakes have never been higher. Ford’s assertion that such a move could ‘turn off the lights’ for millions of Americans living in border states raises questions about the broader implications for both economies.
The energy export landscape
Ontario’s energy exports play a crucial role in the province’s economy, with significant amounts of electricity flowing to neighboring U.S. states like Michigan and New York. In fiscal year 2024, Ontario exported approximately 7,718 gigawatts of power to Michigan alone.
However, this figure pales in comparison to Michigan’s domestic production of over 120,000 gigawatts. This dynamic highlights a critical point: while Ontario’s energy exports are important, they do not constitute the majority of energy consumption for these states.
The risks of retaliation
Experts warn that engaging in a tit-for-tat trade war could have dire consequences for Canada. Drew Fagan, a professor at the Munk School of Global Affairs, cautions that Canada may suffer more from an energy conflict than the U.S.
He emphasizes that retaliatory measures could jeopardize Canadian jobs, particularly in the energy sector, which is known for providing high-paying employment opportunities. The potential for economic damage raises the question: is cutting off energy exports a viable strategy for Ontario?
Alberta’s stance and the bigger picture
Not all provincial leaders share Ford’s enthusiasm for cutting off energy exports. Alberta Premier Danielle Smith has firmly stated that under no circumstances will Alberta agree to such measures. She argues that tariffs only serve to increase costs for everyday Canadians and Americans alike. With Alberta being a significant contributor to Canada’s crude oil exports, the implications of a trade war extend beyond just energy, potentially affecting a wide range of industries, including automotive manufacturing, which is vital to Ontario’s economy.
Canada’s strategic position
In light of ongoing conflicts in the Middle East and Eastern Europe, Canada has the opportunity to position itself as a reliable energy partner for the U.S. Fagan suggests that rather than reducing trade, Canada should focus on enhancing its energy exports to meet U.S. needs. With Ontario being the highest-value exporting province to the U.S., the potential for economic growth through increased energy trade is significant. The question remains: will Ontario and Canada as a whole navigate these tensions wisely, or will they risk plunging into a trade war that could have lasting repercussions?
