Bank of Canada cuts interest rates, highlights risk of Trump tariffs

TORONTO– The premier of Canada’s most populous province said Wednesday he would cut energy supplies to the United States if President-elect Donald Trump imposes drastic tariffs on all Canadian goods.

Trump has threatened to impose a 25% tax on all products enter the United States of Canada and Mexico unless they stem the flow of migrants and drugs.

“We’ll go all the way depending on how far it goes. We will go as far as cutting off their power,” Ontario Premier Doug Ford said after meeting with Canadian Prime Minister Justin Trudeau and other provincial premiers.

Ford said the rates would be “100 percent.”

“We will use every tool at our disposal to fight back. We cannot stand idly by. We just won’t do it as a country. And isn’t that a shame, our closest friends and allies,” Ford said.

About 60% of U.S. crude oil imports come from Canada, as do 85% of U.S. electricity imports.

It was unclear whether Ford was talking about all Canadian provinces suspending energy exports to the United States or just his province. But a Ford spokeswoman, Grace Lee, said the issue was raised during the call between Trudeau and the provincial premiers.

“Premier Ford can only speak for Ontario, but this is an area of ​​provincial jurisdiction that we would certainly look at,” Lee said in an email.

Lee noted that Ontario will power 1.5 million homes in the United States in 2023 and is a major exporter of electricity to Michigan, Minnesota and New York.

Canada is also the largest foreign supplier of steel, aluminum and uranium to the United States and has 34 critical minerals and metals that the Pentagon covets and invests in for national security.

“Of course, Canada will respond to unjustified tariffs,” Deputy Prime Minister Chrystia Freeland said after the meeting.

Freeland said a number of provincial premiers have expressed support for a strong response to tariffs and said that would include critical minerals exported to the United States.

She did not specifically mention oil, but said that “obviously other ideas were discussed as well” when asked if Canada was considering suspending oil exports to America.

About a third of Canada’s trade with the United States is in energy.

The premier of Alberta, which holds the vast majority of Canada’s oil reserves, did not comment immediately after the meeting.

Nearly C$3.6 billion (US$2.7 billion) worth of goods and services cross the border every day. Canada is the primary export destination for 36 U.S. states.

Trudeau said this week tariffs would be “absolutely devastating” for the Canadian economy, but it would also cause real difficulties for the Americans.

Economists say businesses would have little choice but to pass on the extra costs, significantly increase prices for food, clothing, automobiles, alcohol and other goods.

The Produce Distributors Association, a Washington-based trade group, said the tariffs would raise prices for fresh fruits and vegetables and hurt U.S. farmers when countries retaliate.

Trudeau said this week that the government was still considering the “right ways” to respond, referencing when Canada imposed tariffs in 2018 against the United States in a tit-for-tat response to new import taxes. Canadian steel and aluminum.

Canada’s central bank, meanwhile, lowered its key interest rate by half a percentage point on Wednesday and called Trump’s threat to impose drastic new tariffs on Canada a “major source of new uncertainty.

“We have highlighted that the threat of new tariffs on Canadian exports, particularly at the suggested level, constitutes a major source of new uncertainty,” Tiff Macklem of the Bank of Canada said at a news conference. “But the reality is we don’t know if these tariffs will be implemented.

“We don’t know if exemptions will be agreed on certain parts, we don’t know at what level, we don’t know if Canada will take retaliatory measures.”

Trudeau, meanwhile, caught the attention of billionaire Elon Musk, a major Trump supporter, with comments he made Tuesday lamenting that American voters chose Trump over Kamala Harris as president.

“We were supposed to follow a steady, if sometimes difficult, march toward progress. And yet, just a few weeks ago, the United States voted a second time not to elect its first female president,” Trudeau said at an event sponsored by Equal Voice, an organization dedicated to improving gender representation in Canadian politics. “Everywhere, women’s rights and their progress are under attack – overtly and subtly. »

Musk called Trudeau “insufferable” in an article on X. “He won’t be in power much longer,” he wrote.

Ford also criticized Trudeau for the remarks.

“They are of no use. This was brought up several times in our meeting,” Ford said. “Donald Trump was democratically elected. If you like it or don’t like it, that’s not our problem. We elect Canadians and it has served no purpose. I am sure the Prime Minister got the message loud and clear.”