Canada’s trade chief warns oil and gas exports could be in play

If the president elect Donald Trump followed with his threat to impose tariffs on Canadian goodsOttawa is willing to hit back with taxes that could target the energy sector, Canada’s international trade minister, Mary Ng, said Thursday.

“Everything is on the table,” Ng told the World Markets reporter Seema Mody on CNBC’s “Squawk on the Street.”

This includes dollar-for-dollar returns. Canada’s trade chief also refused to rule out an export tax Canadian oil and gas intended for the United States.

“I don’t think the Americans don’t want to sell electricity, oil and gas to America, because you know, I’m here in New York, the Broadway lights, a lot of it is Canadian electricity,” said Ng.

“If you’re going to put tariffs on Canada, what you’re really going to do is make things more expensive for Americans,” he added.

Trump he threatened a 25% tariff on all Canadian exports when he takes office Monday. The threat is similar to one made towards Mexico, the three parties to the USMCA trade agreement. Trump has also talked about raising tariffs on Chinese imports by 10%.

Canada and the United States have a trade relationship that is virtually unrivaled. In 2022, Canada was the the biggest buyer of American goods and the third largest exporter of goods to the United States

Ng and his team are currently drafting a list of US exports to Canada that could see additional tariffs in the event that trade tensions escalate. “Everything will be on the table,” he said.

The same goes for Canadian goods entering the United States.

“You can almost be sure you’re buying something [at a] supermarket… think of a candy bar. There’s probably a Canadian there. So if you pay $4 today, you can pay $5 tomorrow,” Ng said.

The potential threat of an impending trade war with the United States also prompts Ottawa to continue engaging with the rest of its trading partners around the globe, including Japan and the European Union.

“I’ve always had the mandate as Canada’s minister of commerce to diversify,” Ng told CNBC. “It’s really great for us to work with America, but, absolutely, we also need to pursue opportunities in the world. And we are.”

This is not the first time Trump has used tariff threats in an effort to restart trade negotiations with America’s northern neighbor.

During his first term, Trump imposed tariffs on Canadians steel and aluminum exports to the United States

The move prompted Ottawa to announce retaliatory fees on American products like beef, chocolate, ketchup and more.

At that time, Canada did not make a secret selection criteria for which US exports to hit with additional tariffs. Prime Minister Justin Trudeau’s government has deliberately chosen products politically powerful places, such as battleground states and those with powerful representatives in Congress.

The idea was that any negative economic impact resulting from a drop in exports would be felt more by people in the communities that made or grew the products. They, in turn, will put added pressure on their elected representatives in Washington — including Trump, who was running for a second term — to resolve tensions.

This time, Ng said Canada is trying to “find more common ground” before any escalation. She also said Ottawa is working to better secure the border between the United States and Canada. This could help Trump fulfill a key commitment he made on the campaign trail.

“I think we have a very unique opportunity now for Canada and the United States to build an even stronger economy, a stronger North American economy, by working together,” Ng said.

Increasing this partnership could include buying more from the United States, Kirsten Hillman, Canada’s ambassador to the United States told the Associated Press on Monday Seventy percent of Canada’s military hardware is purchased from the United States, Hillman said.

When it comes to buying more military equipment, “Everything is on the table,” Ng told CNBC, from fighter jets to drones.

Canada is currently in the midst of a leadership challenge. Prime minister Justin Trudeau resigned earlier this month. Trudeau’s resignation came just weeks after his former ally and deputy prime minister Chrystia Freeland he also resigned.

In announcing his resignationFreeland, who was also the country’s finance minister, cited differences with Trudeau over the direction of Canada’s trade policy toward the United States.