Cutting off oil is Canada's nuclear option. What would it mean if it happens?
CBC
In Canada's arsenal of possible responses to a Trump tariff, the nuclear option is the threat to withhold, reduce or place export tariffs on Canadian energy.
Already, the mere suggestion of such a tactic has caused a split between the government of Alberta, on one side, and the governments of Canada and all other provinces on the other.
Tariffs on imports from the U.S. have the potential to cause pain to certain industries and regions, but Prime Minister Justin Trudeau himself has acknowledged that the effect of Canada's import tariffs would be diluted by the size of the U.S. population and economy.
The withholding or tariffing of Canadian resource exports, on the other hand, has the potential to cause real, generalized discomfort to the U.S. — albeit at great cost to Canada as well.
"The idea of the threat is hopefully going to do most of the heavy lifting," said Sanjay Jeram, senior lecturer of political science at Simon Fraser University.
"It's not as if it can't happen — that we can't impose either some sort of export tariff on oil and gas to raise the cost, or some kind of outright ban," he told CBC News. "That could be done by the federal government alone. The Constitution does have ways of permitting that."
But Jeram says Canada's position has been weakened by the stance taken by Alberta Premier Danielle Smith, which opens the door for the Trump administration to play divide and rule.
"Does that division within the country make it more likely that Trump would see that we couldn't really sustain that disunity … and perhaps would be more willing to wait it out?" Jeram said.
"That's the real trouble, I think, in the demonstration of disunity."
Nonetheless, there are reasons to believe that Canada's strongest cards in a trade war are not what it would decline to buy, but rather what it would decline to sell.
Oil is not the only resource card that Canada holds, says Lawrence Herman, an international trade lawyer and former Canadian diplomat.
"It's probably the maximum leverage we have — the weapon, if you want to put it that way, that would have the most impact on the U.S. side. But as we all know, it is highly divisive politically in Canada.
"There are ways, however, in which this could be done," Herman told CBC News, pointing to Ontario Premier Doug Ford's willingness to cut off electricity exports that many northern states heavily depend on.
"Why don't we start there? With regard to Western Canada and oil and gas, I think that is something that we should indicate is on the table."
