In a fit of pique over Trump administration tariffs, the leader of the province of Ontario has announced an export tax on electricity supplied by Canadian producers to approximately a million and a half American homes.
Could there be a better argument for American energy independence?
Ontario will slap a 25% export tax on electricity it sends to 1.5 million homes in Minnesota, Michigan and New York in retaliation for U.S. tariffs, said Doug Ford, leader of the Canadian province.
Ford added that he will direct energy producers to shut down the exports entirely if President Trump moves ahead with more tariffs on April 2. He said he would have energy from an Ontario nuclear reactor redirected to local manufacturers instead.
It's unclear as to how easy it would be for an energy company to simply shut down one arm of a power grid. It's not like walking over to a wall and flipping a switch.
Ontario's Ford is making other threats as well.
“President Trump underestimates the Canadian people,” Ford stated. He said Ontario also stood ready to stockpile the nickel the province’s miners usually sell to the U.S.
Canada sells roughly 50% of the nickel it produces to U.S. companies and the Department of Defense. “He’s going to wake up real quickly about our critical minerals,” said Ford.
Here's the thing: President Trump probably doesn't underestimate the Canadian people. Canada needs us more than we need Canada. Also, historically, President Trump has used the threat of tariffs more as a negotiating tool than as an economic sanction; there are indications that this is already working.
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Now, that's not to say that the tariff wars won't have some adverse effects. Prices for commodities ranging from timber to Viagra could go up in the short term. Tariffs can have that effect, but reciprocal tariffs hit both sides, and Canada can't absorb as much as the United States can. We have 12 times their GDP and eight times their population. We can absorb more economic opprobrium than Canada can.
That's not to say that tariffs, even reciprocal ones, are an ideal economic solution. They aren't. Free and unfettered trade between the free markets of free people living in free nations would be ideal. But we don't live in that world, and likely never will. Various nations (I'm looking at you, China) will always seek unfair advantages. Up to a point, that's to be expected. China's Chairman Xi should rightly be just as focused on China's interests as President Trump is on America's interests; that's his job. However, that doesn't mean that the United States should lie back and placidly accept poor behavior on the part of our trade partners.
In the case of Canada and Mexico, President Trump is looking to prompt those nations to take steps to help secure our mutual borders and to stop the flow of deadly drugs, most notably fentanyl, across those borders. That's not an unreasonable ask. And Canada, in particular, you would think would be amenable. They are our closest neighbor, and the two nations have a remarkable history. I'm not aware of any other time in history where two nations have shared a 3,000-mile, completely demilitarized border (much more if you include the Alaska/Yukon border) with no cross-border hostilities in over 200 years. We share a language and a lot of our culture. We should be able to work these things out.
In the meantime, the electricity issue makes a strong case for enhancing our electrical grid and generation capacity. No American homes should be dependent on energy from another country, not even Canada.
Oh, and Mr. President? If nickel is what you're concerned about, we've got plenty of it here in Alaska.
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