Front Burner - Is Canadian energy our tariff war trump card?

Episode Date: March 6, 2025

Two days after U.S. tariffs were imposed on Canada and Mexico, the trade war rages on. While an exemption has been made for three major automakers, President Trump and Prime Minister Trudeau still appear to be at an impasse. As Ottawa imposes counter-tariffs and the provinces announce further retaliatory measures, what are levers can Canada pull on to get the Americans to walk back? Some of the biggest include our crude oil and wide range of critical minerals.Jonathon Wilkinson, Minister of Energy and Natural Resources, joins us to talk about the latest on how talks are going between the two governments and why he thinks the U.S. won’t be able to hold out without Canadian resources for long. For transcripts of Front Burner, please visit: https://www.cbc.ca/radio/frontburner/transcripts

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and exciting cities. It's the sort of city you could visit countless times and always explore and experience something new. There's Business Class and then there's Emirates Business Class. Book now on emirates.ca. This is a CBC Podcast. Hey everybody, Jamie here. So we're going to try something a little bit different. We want to do a call-in episode ofBC podcast. Hey everybody, Jamie here. So we're going to try something a little bit different. We want to do a call in episode of the podcast.

I'll give you one guess what it's going to be about. Yep. Tariffs and the overall impact that Trump is having on Canada right now, our economy, our elections. I know that you're all very smart, but that doesn't mean that you don't have questions, so please send them to us. Email is totally fine frontburner at cbc.ca, but voice notes are actually the best. Record your question and email it to frontburner at cbc.ca. Let us know who you are and where you're from so we can shout

you out. You can also submit directly on Spotify if that's where you're listening. Leave them in the comments. We've turned them on. Your questions could be about anything, like what's the story with Trump and Wayne Gretzky? Is it technically possible to not send electricity to the U.S.? Or maybe it's like an advice type style question. Are you still planning a trip to Florida, but your friends are giving you the gears? We'll remind you for the next couple of days, and if we get a pile of great questions, we'll make an episode from them. So please, please send them in. The email again is frontburner at cbc.ca, all one word. Okay, here is today's episode.

As you all know, Canada has been plunged into a trade war with the U.S. We are now on day two. The latest. Trump and Trudeau spoke by phone. Auto makers appear to be getting an exemption from tariffs at the moment, with talks ongoing. Today on the show, Minister Jonathan Wilkinson is here. He is currently the Minister of Energy and Natural Resources. It's the file with arguably the biggest levers to pull in this trade war.

So we're gonna talk about that. But also the latest in the negotiations and what he thinks the path forward is for this liberal government. All right, here we go. liberal government. All right, here we go. Minister Wilkinson, thank you very much for being here. Well, thank you for having me. So as I mentioned, Trudeau and Trump spoke midday today. You and I are speaking just

after 4pm Eastern time on Wednesday. It feels very important that we timestamp this conversation because this is such a moving target. It looks like the latest news is that the automakers are getting a reprieve from tariffs. And I just, what do you think about that latest piece of information? Well, I guess, I guess it's useful in the sense that there's a reprieve for the auto sector, but it's a reprieve for a month with the president also saying that the automakers need to move all of their production to the United States. So not a perfect statement. Look, I would say we are interested in seeing the tariffs removed entirely. We're not interested

in half measures that are trying to deal with different sectors differentially. At the end of the day, these tariffs are unwarranted. They are unjust. They are an economic attack on an ally. They are treating Canada like an adversary. We're not China, we're Canada. We actually have historically been a partner to the United States.

And just this position that the government currently has that they will not settle for reduced tariffs. They want them removed, that they will not settle for reduced tariffs. They want them removed, that they are not willing to pull back on any retaliatory tariffs until they are removed. Just tell me a little bit more about the reasoning there. Why do you think that's the path here? Well, I think it's the path for a whole range of reasons, but I mean, most fundamentally,

Canada has nothing to apologize for here. At the end of the day, the president said initially it was the border. When we looked at the numbers of people crossing illegally or the numbers of fentanyl going across the border, they were tiny and they were going both ways. We then said, okay, in good faith, we agree, one person, one pound of fentanyl going across the border either way is a problem. We will invest and we committed over a billion dollars to tighten up on the border as the Americans were tightening up on their side. The recent numbers actually show a 97% reduction in the amount of fentanyl from 30 pounds a year down to less than basically a pound. I mean,

the issue is not the border. And so, you know, President Trump is doing this for reasons other than what he says. At the end of the day, he is certainly trying to drive investment into the United States and away from Canada. That's just not on from our perspective and they need to withdraw the tariffs or there definitely will be retaliatory actions on the part of Canada. Just tell me more about what you think this really is about. Well, I mean, look, as I said, initially, they said it was about the border, then they said it was about the trade surplus. And so we've had conversations about the trade surplus. I think it's about trying to drive investment out of Canada and into the United

States. And so we are into effectively an economic war that has been launched by the United States. And in that capacity, Canada is not going to simply surrender and give up and give in. And half measures of, oh, we'll take half the tariffs instead of the full tariff. No, I mean, at the end of the day, we have done nothing wrong here. We have been a good partner to the United States.

And at the end of the day, if President Trump wants to fight, then so be it. That's not what we want. We want to find a pathway away from the tariffs. But I mean my goodness this is a crazy situation when the Americans are treating us worse than they treat China. I'd like to read you some of what Trump posted to True Social this afternoon. He talked about fentanyl and how he's not satisfied that we've done enough. And then he went on to say, the call ended, he's talking about the call between him and the prime minister in a somewhat quote, friendly manner. He was unable to tell me when the Canadian election

is taking place, which made me curious, like what is going on here? I then realized he is trying to use this issue to stay in power. Good luck, Justin, exclamation point. Thoughts on that? How is this going right now? This doesn't seem like it's going well.

Look, I mean, this is enormously disrespectful to the head of state of another country and to Canadians generally. It's just as is the case when he says Canada should be the 51st state. It is enormously disrespectful, particularly to an ally. I think most Canadians are rightly shocked and horrified by this. And to be honest, the reaction in Canada has been, yes, shock. It's been certainly concerned, but it's also been anger. I mean, you talk to people on the street, people are angry and it's not angry because he's talking about Justin Trudeau. He's talking about the prime minister of Canada. This is ridiculous

and something that we never thought, none of us ever thought we would ever see in our lifetime. The Prime Minister looked down the barrel of the camera lens yesterday and he said, Now it's not in my habit to agree with the Wall Street Journal, but Donald, they point out that even though you're a very smart guy, this is a very dumb thing to do. The U.S. Secretary of Commerce Howard Lecknick has said that the things that Trudeau said are ridiculous things he's said in the last couple of days.

It's sad. It's time for him to go. Do you think that that is the smart move right now on the part of the Prime Minister when dealing with someone who's very unpredictable and mercurial? Well, it's a different balance or a difficult balance to walk, right? At the end of the day, we certainly are not interested in escalating this war. We're interested in finding pathways out of the conversation about tariffs, which inevitably is a lose lose.

It's a lose for Americans. Let's be clear. It's higher energy prices, it's higher food prices, it's higher prices for automobiles, but we're interested in finding pathways out of it. But I also think that Canadians do expect their prime minister to stand up for them and to stand up for the country. And at the end of the day, when he spoke to Donald Trump, he spoke directly to him in the same way that President Trump speaks directly to him. And I don't think there's anything wrong with that.

Letnik also said that Canada made a Excellent offer today. And we don't think there's anything wrong with that. Letnick also said that Canada made a Excellent offer today. And we're talking to the president. What do you mean by offer? What do you mean? Excellent offer? What does that mean? More work on the border. More work on the border. No, lots of details. We're going through it together. Do you know what he's talking about? Well, I think what he's talking about is almost certainly the border and that we actually continue to say we are willing to do more if there's more that needs to be done. But we're not offering,

as I say, to do half measures with respect to tariffs. At the end of the day, Canada and the US are both better off if we don't have tariffs in place. I mean, my goodness, we've had a consensus on free trade in this country across all political parties since the 1988 free trade election. Um, and we have thought that we would be able to work and have been working actively with the Americans to build, uh, an economy that would provide benefits to both parties. Clearly this has disrupted that consensus.

Um, it is going to be worse for both parties from an economic perspective, but it has shattered the Canadians' trust and faith in the United States, and we will never go back there again. I know you said that we'll never go back to where we were three months ago. I mean, that's quite a statement from you. I would be interested just to hear a little bit more about why you say that. Let me preface it by saying we are neighbors to the United States. That's obviously not going to change. We can't cut ourselves off and float off into the ocean. There will always need to be a trading relationship and other relationships

with the Americans. But I think in Canada, we've gotten so comfortable with the idea that the Americans were people that we would be able to work with on an ongoing basis under a free trade agreement that perhaps we were not focused enough on building an economy that would be more resilient. That I think on a go forward basis, there are a number of things that we are going to need to do to ensure that we reduce our dependence and our exposure to the United States. That includes getting rid of inter-permitual trade barriers, something we've been talking about for a long time in this country, but I think this time we will get it done. It means very strategically deepening our trade relationships with a number of other countries. It means debattling our ports and our railways, and it means thinking about vulnerabilities in terms of energy infrastructure. And it means

making sure that we're thinking about how Canada can be a great place to invest in the face of what President Trump is doing. So no I don't think Canadians will ever go back to that level of trust. I just don't. The following is advertiser content from Emirates. When you're boarding the Emirates A380 with your Emirates Business Class ticket, you can be assured that you're in good hands. The spacious lie-flat seats are designed with comfort and relaxation in mind, all so you can stretch out and unwind. On board, you'll have the opportunity to indulge in a world-class dining experience. The gourmet menus on board are all regionally inspired, ensuring that

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Book now on emirates.ca. What do you see when you look around? Lively cities, growing neighborhoods, things that connect us. For those into skilled trades, it's a world they helped create. Discover more than 300 careers, paid apprenticeships, and the unmatched feeling of saying, I made that. Learn more at Canada.ca slash skilled trades. A message from the government of Canada. I want to come back to some of what you were just talking about, particularly when it comes to our energy infrastructure

in a few minutes, but if we could just stay for a little bit longer on the negotiations right now. So you were talking earlier about how we will fight back. We will retaliate. We have put 25% tariffs on $30 billion in US goods. It is currently set up to set to go up to $155 billion in three weeks, right? From now.

Yep. You've been in Washington. I know you have contacts there. Uh, how are the counter tariffs landing with your counterparts in Washington? Do they care? Oh, I think they do. I think you're seeing that in a number of government officials, the governor of Kentucky, for example, Senator Grassley in Iowa, who's very worried about the impact of tariffs on POTASH because it will raise food prices. Senator Ted Cruz who is from Texas has said that he thinks the tariffs are not a great idea and we're seeing more and more of that each and every day. Part of the way in which we have

looked to respond to the American tariffs is to look at goods that the Americans actually sell into Canada in significant quantities for which there are available alternatives for Canadians. Think Kentucky bourbon and orange juice. At the end of the day, this is about ratcheting up the domestic pressure on the United States and on the president to remove the tariffs. Look, I have a hard time finding anybody in Washington who actually thinks these tariffs are a good idea. That is true of American business. That is true of Republican senators. That is true of Congress people, Republicans and Democrats alike. It is even true of folks that are either in or around the Trump administration. There are a few who have a different view, I guess, but by and large, there's a pretty strong consensus that this is a bad idea. What do you make of the argument that anything we do here is generally like a rounding error

in the US economy and that really counter tariffs will actually hurt us even more by driving our prices even more. Our opponent has shot himself in the foot and now we're also going to shoot ourselves in the foot. That's the argument going to shoot ourselves in the foot. That's the argument, right? That's the argument. So I guess I would say a couple things to that. If we just followed Donald Trump's lead and we simply impose tariffs across everything,

you might be able to make that argument. But we are being a lot more targeted and strategic. We're going after those goods that benefit the Americans from an export perspective and that actually get sold in Canada. And down the road, we have options to look at what we do with respect to critical minerals and energy, which are incredibly important for the US economy. So we're not doing this willy-nilly. We are actually focusing on the things that are actually going to create the most political

pressure on the administration. And that's just smart. Let's talk about oil when we talk about stuff that the U.S. needs, right? Alberta Premier Daniel Smith has said that she does support the federal response and she announced her province's own measures today, including stopping alcohol imports from the U.S. No further purchases of U.S. alcohol or new VLTs will be permitted through the AGLT, AGLC until further notice. She did call Alberta's energy our secret weapon. A trump card, so to speak.

And it is located directly under our feet and it is called Alberta energy. You see Alberta happens to have one of the. But she doesn't want to tax energy exports to the U S she doesn't want to stop the supply to the U S. Do you think the premier is wrong to take it off the table? Well, I think we have a very good point. doesn't want to stop the supply to the US. Do you think the premier is wrong to take it off the table? Well, I think we haven't gotten to that part of the argument yet. I mean, the prime minister has been meeting regularly with the premiers of all the provinces and territories, coming up with approaches that ideally have unanimous support. Not all of them may in the future, but certainly

ideally have unanimous support. That's how we may in the future but certainly ideally have unanimous support. That's how we came up with the two initial lists. We've also agreed that there are other tools in the toolbox that potentially may need to be used down the road. That could include energy but that's going to need to be a conversation about how we would do that, when we would do that and it needs to involve Alberta and Saskatchewan and Newfoundland, Labrador and BC who are the producers. I would also say that while energy potentially is a card, I actually think the even more dramatically useful card are critical minerals. The Americans need a whole range of those from us, some of them in smaller quantities like germanium and gallium that are required in defense applications and a number of other things, some in very large quantities like nickel and zinc.

And for many of these commodities, the only alternative to getting them from Canada is China. And in some cases, like uranium and Padezh, it's from Russia. It's pretty hard to say with a straight face as the American president that you're more secure getting all of your supply of critical minerals from China and Russia than you are from Canada? Well, I don't know. Does that seem so crazy to you in this current moment?

I watched what happened in the Oval Office last week. It certainly sounds crazy to me in this moment, perhaps a little bit less crazy with Russia, but I think it still sounds pretty crazy with China. Yeah, fair. I mean, I know that you've talked in the past about like deepening our relationship with the United States when it comes to mining critical minerals.

Like where's that right now? And would we, are we even considering the possibility of getting further kind of entrenched in this relationship at this point? So, um, under the Biden administration, we certainly did a fair bit of work together, including some co-investments between Canada and the United States in minds that we were looking to actually help to accelerate. At the present time, I've been talking in Washington about a bit of a different concept, which is not a full-blown, let's work on critical minerals together. But there are a few specific projects that we could do in Canada that would actually help President Trump address some of the concerns he has from an energy security perspective vis-a-vis China in particular.

Those are things that could create economic benefit in Canada, but also help to solve some of the challenges that the United States faces. Those are not across the board. They are very specific projects like Germanium in British Columbia, where tech could actually scale up the amount of Germanium we produce and supply all of the needs. It's a mineral that China has banned the export of to the United States. And so there are a few of those kinds of specific projects that we have said we could work on together. As long as we're actually out of the conversation on tariffs. These are things that could create mutual benefit. It's essentially an off-ramp to the conversation on tariffs. These are things that could create mutual benefit. It's essentially an off-ramp to the conversation

about tariffs. And I would tell you, many of the folks that I talk to in Washington think it's a fantastic idea. But I would also say that concurrent with some of these very specific projects, we still have to work on this resilience, on building a more resilient economy. As I say, we will never be able to trust the United States

in the same way that we did three months ago. Not to say we won't trade with them, but we need to be more resilient moving forward. So to that point, there's been a lot of talk lately about a cross-country West to East pipeline being resurrected as a way to lessen our reliance on the US and export more oil overseas. Do you support that? Does your government support that? Well, I think people are jumping to a solution before they

actually have talked through the challenges. So one is, is there an economic case for such a pipeline? And the second is, is there a company willing to build it? I don't know. Well, no, there is no proponent at this point. But so one is, is there an economic case? And the second is, is there a national security rationale? If there's an economic case, you would assume there's a proponent. And the proponent will build it.

But I would say people really don't understand how sticky the oil issue is in the United States in the sense that I don't believe that the United States can move away from its dependence on Canadian oil. They produce about 13 and a half million barrels a day of what's called light sweet crude, and they consume over 16 million barrels and they export some.

Um, the refineries that use Canadian crude are set up to use this heavy crude, which is very different. Um, and so for them to actually switch from using our crude, they would have to find a way to actually expand the production of their own oil. They would have to retrofit all of the refineries, which would be tens of billions of dollars

and many years of reconstruction. So I don't think that we are likely to see a significant decline in oil going to the United States. But if President Trump decided that he's going to spend 50 billion dollars and he's going to take the six or seven or eight years to do it, would there be an economic case for a pipeline, a different pipeline in Canada? Potentially. And that's a conversation that we would need to have in that context. Absent that, we have 4.3 million barrels a day that go to the United States. We have some additional capacity in the trans-mountain pipeline. We could actually increase the flow of the

trans-mountain pipeline by another three or four hundred thousand barrels. So right now there's over capacity. And so if we were thinking about building a pipeline across the country, it would almost certainly have to be for national security reasons in terms of getting oil to Ontario or getting oil to Atlantic Canada. And there are other options for that. And so while I think it's an important conversation for Canada to have, I would caution people of jumping to the idea that there is a need for a new pipeline. What would the other options be? Well, I mean, there are certainly in Atlantic Canada, there's an opportunity to actually import oil from other countries into the Atlantic provinces and into the port of Montreal. There are options potentially to be able to reverse flow of some of the pipelines that

exist there. So there are a number of different options and it is an important conversation for us to have in terms of energy infrastructure going forward. But people who jump to, we need an oil pipeline from east to west, are not yet looking at the facts. And we need to ensure that these decisions are made based on the facts. What about the argument that if this was for national security reasons, because the United States has become so unreliable, what about the argument that we should do it now because it takes so long to build them that by the time We realize that this was a national an immediate national security concern

We would be screwed like is that with that and that's an interesting argument I guess what I would say is if the United States were to try to switch their refineries from From heavy crude from Canada to light crude from the United States It would take many years. Like Exxon just did this with one of their refineries and it took four years. So to do all of the refineries, it's probably upwards of a decade.

So you've got a fair bit of runway in terms of figuring out how you would then take that oil and move it to either the West coast or the East coast. Absent that, then you're talking about security of oil for Ontario that presently comes, for example, through Line 5, which comes up from the United States, or that comes into Atlantic Canada from the United States. And in that regard, we obviously need

to look at what the various options are. Like a pipeline, the Transplant Pipeline cost $30 billion, and it took several years to build. In hindsight, it's been a very good investment, but we need to be sure that that's something that the country needs before you actually, Minister Wilkinson. On Sunday, your party will elect a new leader. I know that you've endorsed Mark Carney, but regardless of who wins on Sunday, do you think that an election needs to be called right away so that Canadians can give someone a mandate to deal with the Americans?

They can vote for the person that they want to do this. Well, there are certainly different people saying different things, right? I mean, you have- All sorts of people saying all sorts of things. You have the leader of the NDP saying, come back to parliament, even though he's also saying at the same time that I'm going to defeat you

as soon as there's a vote, seems a bit contradictory. Look I think that that is there is a compelling argument to be made that that whoever wins the leadership may want to seek a mandate immediately following to be able to actually deal with Donald Trump. I think all of the opposition parties are calling for an election, but there may be things that happen between now and then that change the dynamic. I mean it's a pretty dynamic environment right now. Okay, Minister Wilkinson, thank you very much for stopping by. Thank you very much.

Music Alright, that is all for today. I'm Jamie Poisson. Thanks so much for listening. Again, please send those questions in frontburner at cbc.ca. Talk to you guys tomorrow.