GUNTER: Danielle Smith’s approach on Trump tariffs looks worthy

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Both sides in the brewing trade war between Canada and the United States are behaving irrationally.

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Incoming U.S. President Donald Trump can’t afford to impose punitive tariffs on Canadian oil, as he has threatened to do on Day One of his presidency next week. Similarly, our federal Liberal government cannot afford to make a point with Trump by cutting off oil and gas shipments from Alberta, as Foreign Affairs Minister Melanie Joly threatened over the weekend.

Ottawa’s threat to turn off oil exports to the U.S. would be economically ruinous for this country

Oil and gas exports southward make up nearly one-third of all of Canada’s exports and more than eight per cent of our total GDP as a country.

Such a move would hurt Alberta the most, since 90 per cent of Canada’s oil and gas comes from here. But locking down nearly one-tenth of our entire economy (not merely one-tenth of our exports) would threaten jobs, businesses and lifestyles from coast to coast.

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However, an even bigger problem might be the national unity crisis that would be triggered if Ottawa tried to commandeer control of Alberta’s oil and gas to feed its trade spat with the Trump administration.

Speaking to CTV over the weekend, Joly said an oil and gas embargo was one of the possible retaliations the Trudeau government would consider if Trump followed through on his threat to impose a 25 per cent tariff on all goods coming from Canada, unless our government stopped the flow of illegal immigrants and illegal drugs.

However, Joly didn’t also threaten to embargo auto parts from Ontario or electricity and dairy products from Quebec, just Canadian oil and gas, 90 per cent of which comes from one province, Alberta.

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Maybe that wouldn’t be such a big deal if Joly were not part of a government that has for nine straight years singled out Alberta for economic punishment and moral blame. And maybe it wouldn’t be so bad if the minister were not a member of a party that has attacked Alberta and its biggest industry unrelentingly for 50 years.

But if Joly and the Trudeau cabinet use Alberta’s oil and gas as a bargaining chip to protect Ontario’s and Quebec’s manufacturing and transportation sectors, then, as Alberta Premier Danielle Smith correctly warned on the weekend, the Liberals “will have a national unity crisis on their hands at the same time as having a crisis with our U.S. trade partners.”

There is no separatist movement of any consequence in Alberta at the moment, but there would be if Ottawa uses an oil embargo to protect the industries of Liberal-voting central Canada.

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On the other hand, Trump can’t truly afford to put tariffs on Canadian oil, which now accounts for one-quarter of all the oil refined in the U.S. Not one-quarter of the imported oil refined there, but one-quarter of all the oil used by U.S. refineries.

Indeed, the 25 refineries in the U.S. Midwest — the heartland that was so critical to Trump’s convincing win in November’s election — rely on Alberta oil for two-thirds of their feedstock. Trump’s big problem is not just that his tariffs would raise the price of gasoline for American motorists. If his tariffs price Canadian oil out of the market, the crude we supply could not be easily replaced, so it’s likely Midwest refineries and gas pumps could run dry at times.)

Far smarter that Joly is Smith’s approach of meeting with Trump and his advisers at Trump’s home in Mar-a-Lago, Fla.

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Her two meetings over the weekend have an element of kiss-the-ring to them, for sure, and they will certainly drive “progressives” out of their minds. But if the meetings save our exports, even if only in the long term, they will be far more effective than anything the Trudeau Liberals are doing.

lgunter@postmedia.com

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