US, Canada Exchange Tariff Warnings, Sparking Trade War Concerns

A senior official in the government of Ontario, Canada, recently warned that the province might ban US-made alcohol and restrict electricity exports to several American states if President-elect Donald Trump imposes tariffs on all Canadian products, according to media reports.

This warning, along with others issued by Canadian officials, has heightened concerns about a potential trade war between the United States and one of its most important trading partners.

Additionally, according to a senior official, Canada's most populous province is considering imposing export bans on critical minerals essential for electric vehicle batteries and barring US-based companies from participating in Ontario's government procurement processes, reports Xinhua news agency, citing the Associated Press.

Ontario Premier Doug Ford confirmed on Thursday that the province is considering cutting energy supplies to the US states of Michigan, New York, and Wisconsin. "We power 1.5 million (US) homes, and if they impose tariffs, it will become unaffordable for Americans to buy electricity," Ford told reporters.

"If you come and attack Ontario, you attack the livelihoods of people in Ontario and Canadians; we are going to use every tool in our toolbox to defend Ontarians and Canadians," said Ford.

Commenting on Ford's warnings, Trump said on the same day, "That's OK if he does that. That's fine."

"I have so many friends in Canada, but we shouldn't have to subsidise a country," said the US President-elect, who announced in late November his intention to impose a sweeping 25 per cent tariffs on all imports from Canada and Mexico.

Earlier this week, Canadian Prime Minister Justin Trudeau met with provincial premiers to coordinate a response to the potential tariffs. Finance Minister Chrystia Freeland revealed that several premiers supported "a robust Canadian response," including restricting exports of critical minerals and metals to the United States.

Freeland also noted that Canadian business and labour leaders are engaging with their US counterparts to address the issue.

The proposed tariffs on Canada and Mexico would significantly impact US consumers, driving up prices for automobiles, vegetables, fuel, prepared foods, and animal products, according to a Peterson Institute report cited by CNN on Thursday.

"American consumers and firms will bear the effect of higher tariffs, with the substantial cost for the average American household, and a burden that falls more heavily on lower-income households," said Peterson Institute researchers.

Meanwhile, a Nanos Research survey commissioned by CTV News earlier this month revealed that approximately 65 per cent of Canadians would be "less likely" or "somewhat less likely" to purchase US products if the proposed tariffs were implemented.

A model by the Canadian Chamber of Commerce estimates that a 10 per cent tariff alone would shrink Canada's GDP by 0.9 to 1 per cent, costing approximately 30 billion Canadian dollars ($21.3 billion) annually, while the United States could lose 125 billion ($88.8 billion) a year. A 25 per cent tariff would likely amplify these losses, according to a Canadian Press report in November.