WASHINGTON (AP) — Canada’s energy minister came to Washington this week to warn U.S. lawmakers about President-elect Donald Trump’s tariff threats to Canada: They would cause economic pain to Americans, with higher prices and job losses.
Jonathan Wilkinson, Canada’s energy and natural resources minister, said he feels obliged to sound the alarm about the inflation risks created by a president elected largely on a promise to lower prices.
“It will mean higher gas prices, it will mean higher food prices, it will mean higher natural gas prices for heating people’s homes,” he told The Associated Press on Wednesday. “It will mean higher electricity prices. That’s not something Donald Trump campaigned on. He campaigned to actually lower the energy price.”
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Trump has threatened to impose sweeping 25% tariffs on both Canada and Mexico. He has also threatened tariffs on China and Europe, creating a sense of uncertainty about whether this is just a negotiating ploy or a wholesale restructuring of US foreign relations.
Trump in recent days has doubled down on his pledge to impose tariffs on other countries. On Tuesday, he vowed to create a new agency called the External Revenue Service to collect tariffs and other revenues from foreign countries. “We will start charging those who make money from us through Trade, and they will start paying,” Trump wrote on Truth Social. He compared its planned creation to the Internal Revenue Service, the nation’s domestic tax collector.
Canada is considering retaliatory tariffs on American orange juice, toilets and some steel products if Trump follows through on his threat. As Trump imposed higher tariffs during his first term, Canada announced billions of dollars in new tariffs against the U.S. in 2018, in response to new taxes on Canadian steel and aluminum. The dispute never led to broader inflation across the economy, even as it demanded higher costs for some.
But by targeting America’s second-largest trading partner after Mexico, Trump risks upending markets for cars, lumber and oil — all of which could quickly be transferred to consumers.
“I really think people just need to understand that we are going down a path right now that will increase the cost of living for people in the United States for no benefit,” Wilkinson said. “Zero benefit.”
Wilkinson is considering a bid to lead Canada’s Liberal Party after Prime Minister Justin Trudeau announced his resignation this month. He expects to make a decision by the end of this week.
Although Trump has said he will announce the tariffs immediately after taking the oath of office on Monday, it is still not publicly clear what exactly that would entail. It is possible that he could simply announce his intentions to impose tariffs, phase them in gradually, or simply declare an economic emergency to justify higher taxes on imports.
While Trump has shown a willingness to act on his own, Democrats are trying to protect his legislative ambitions — a sign that they are taking seriously the kinds of scenarios outlined by Canada, Mexico and others.
Reps. Suzan DelBene, D-Wash., and Don Beyer, D-Va., introduced legislation Wednesday that would roll back the International Emergency Economic Powers Act, which gives the president the authority to impose sanctions on hostile foreign nations that declare an emergency forms. to the US
DelBene, on a call with reporters to preview the legislation, said Trump’s tariffs constitute a “nationwide sales tax on foreign goods that saddles families with higher prices.” “This is the textbook definition of a trade war,” she said.
Despite Trump’s claim that the US does not need Canada, a quarter of the oil America consumes per day comes from there.
Wilkinson said that in addition to the increase in consumer prices, the U.S. could see job losses in areas that process Canadian energy products, including the Midwest and Gulf states. “If you don’t have access to Canadian gas, you can’t do that. The same goes for potash.”
The threat from Canada comes as concerns about the impact of Trump’s tariff proposals on the U.S. economy and inflation are growing in corporate boardrooms, on Wall Street trading floors and among Federal Reserve officials. The Fed has already indicated that it is concerned that rates could increase U.S. inflation somewhat.
Neel Kashkari, chairman of the Fed’s Minneapolis branch, said Wednesday that a one-time rate imposed by the U.S. is unlikely to make inflation much worse in the long run. But once other countries retaliate, Kashkari said, the impact could worsen.
“If there are any, it becomes much more complicated to try to predict what impact that will have on actual inflation going forward,” he said.
Wilkinson said: “My focus is really to try to get us away from the tariff conversation, which I would say is lose-lose.”