Ontario Threatens U.S. with Alcohol Ban Amid Trade Dispute

Ontario Threatens U.S. with Alcohol Ban Amid Trade Dispute \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ Canada’s Ontario province may ban U.S.-made alcohol and restrict electricity exports to states like Michigan, New York, and Minnesota in response to potential tariffs proposed by U.S. President-elect Donald Trump. Premier Doug Ford warns such tariffs could devastate Ontario’s economy, prompting retaliatory measures that include limiting exports of minerals critical for electric vehicle production. Alberta and Quebec also voiced concerns over the potential trade fallout, emphasizing energy’s vital role in U.S.-Canada relations.

Canada-U.S. Trade Tensions: Quick Looks

• Ontario Retaliation Plans: Potential alcohol bans and limits on electricity exports to key U.S. states.
• Critical Minerals: Ontario may restrict U.S. access to vital EV battery materials.
• Trump’s Tariff Threat: A proposed 25% tax on Canadian goods raises alarms across Canadian provinces.
• Energy Sector Stance: Alberta refuses to cut oil exports, advocating diplomacy over retaliation.
• Economic Impact: Canada accounts for 60% of U.S. crude imports and 85% of electricity imports.
• Border Security Measures: Canada pledges to enhance security with drones, patrols, and law enforcement.
• Diplomatic Engagement: Canadian leaders, including Trudeau, stress economic interdependence to ease tensions.

Deep Look

Canada is preparing a strong response to potential sweeping tariffs proposed by U.S. President-elect Donald Trump, as tensions over trade and border security escalate. Ontario, Canada’s most populous province, may ban American-made alcohol and restrict electricity exports to U.S. states, including Michigan, New York, and Minnesota, according to a senior government official. The measures are part of Ontario Premier Doug Ford’s strategy to defend Canadian interests should Trump follow through on his 25% tariff threat.

Ford, speaking on Wednesday and Thursday, emphasized the importance of protecting Ontario’s economy and livelihoods, calling these retaliatory measures a “last resort.” “If you attack Ontario, you attack Canadians. We will use every tool to defend ourselves,” Ford said, adding that electricity exports to the U.S. would become prohibitively expensive for American consumers under such circumstances. Ontario powered 1.5 million U.S. homes in 2023, making it a crucial energy supplier for neighboring states.

Targeted Trade Restrictions

In addition to the alcohol ban, Ontario may limit exports of critical minerals used in electric vehicle batteries, a move that could disrupt the growing EV industry. U.S.-based companies could also face restrictions from participating in Ontario’s government procurement processes, signaling a broader economic pushback.

Trump’s tariff threats stem from his demands for stricter controls on illegal migration and drug trafficking. However, Canadian officials argue that Canada’s contributions to these issues are minimal, with illegal migration from Canada accounting for just 0.6% of U.S. totals and fentanyl seizures from Canada making up only 0.2%.

Energy as a Bargaining Chip

The energy sector remains a focal point in the standoff. Alberta, Canada’s oil-rich province, has ruled out cutting off oil exports, choosing instead to engage diplomatically. Alberta Premier Danielle Smith emphasized the province’s role in addressing energy affordability and security in the U.S., supplying nearly 4.5 million barrels of oil per day, which constitutes 60% of U.S. crude imports.

Premier Ford warned that imposing a 25% tariff on Alberta oil would result in a $1 per gallon increase in U.S. gasoline prices. Similarly, Quebec Premier François Legault, whose province is a major electricity supplier to the U.S., expressed preference for diplomacy over retaliatory energy cutbacks. “I prefer strengthening border security to stopping energy exports to the U.S.,” Legault said, referring to a plan announced by Canadian Prime Minister Justin Trudeau.

Canada Bolsters Border Security

In a bid to address U.S. concerns over border security, Canada plans to enhance its efforts with increased funding, additional border officers, drones, and drug-sniffing dogs. Alberta has also announced the creation of a new sheriff patrol unit tasked with monitoring its border with Montana. This initiative will include surveillance drones and a designated critical infrastructure zone where sheriffs can act decisively against illegal crossings and trafficking.

Public Safety Minister Dominic LeBlanc said these measures will be shared with the incoming Trump administration in hopes of easing tensions. Canadian officials, including Trudeau, have underscored the interconnectedness of U.S. and Canadian economies, noting that Canada is the top export destination for 36 U.S. states.

Economic and Political Fallout

Nearly CAD 3.6 billion ($2.7 billion USD) worth of goods and services flow across the U.S.-Canada border daily. A tariff of the magnitude Trump proposes would disrupt this relationship, devastating both economies. Canadian officials have pointed out that previous U.S. tariffs on Canadian steel and aluminum led to reciprocal duties in 2018, which hurt businesses on both sides of the border.

Newfoundland Premier Andrew Furey noted concerns from U.S. state governors over the potential fallout. “We hope it is just bluster,” Furey said, adding, “There will be no winner in a trade war.”

At a recent dinner at Trump’s Mar-a-Lago resort, Canadian officials, including Trudeau, discussed trade deficits and border security. Kristen Hillman, Canada’s ambassador to the U.S., pointed out that while the U.S. had a $75 billion trade deficit with Canada, a significant portion of Canadian exports to the U.S. are energy-related.

Trudeau described the prospect of tariffs as “absolutely devastating” for Canada, noting that American consumers and businesses would also face significant hardships.

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