Canadian energy minister calls for US-Canada trade alliance amid tariff threat

The US and Canada could forge a new alliance on energy and critical minerals trade and put an end to tariff talks, Jonathan Wilkinson, Canada's minister for energy and natural resources, said at a Feb. 4 speech at the Atlantic Council Global Energy Forum.

Wilkinson was in DC to meet with US government officials and business leaders to help blunt the effect of US President Donald Trump's threat to impose 25% tariffs on many Canadian goods. Energy and critical minerals would face a 10% tariff, though Trump delayed the tariffs to March 1 after Prime Minister Justin Trudeau promised to name a fentanyl czar in addition to Canada's existing commitments to better secure its border with the US. Wilkinson called for the US and Canada to establish an "energy and critical mineral alliance" to promote energy dominance and economic security for both countries.

"Such an alliance would enable United States and Canada to achieve our shared vision for affordable energy bills for families, strong and secure economies and North America as the world's dominant energy supplier," Wilkinson said.

Wilkinson told reporters at the forum he is "very hopeful" tariffs can be avoided, and he sees his proposed trade alliance as a path toward duty-free trade.

"I think there are opportunities for conversations to enable us to actually move away from the conversation about tariffs," he said. "I'm here to talk about one option in that regard, which is to focus on how we can help each other through working much more closely on critical minerals and energy."

The tariffs, originally supposed to take effect Feb. 4, were expected to have a significant impact on both countries, which rely on each other for commodities trade.

"The current trade balance also already provides the US advantage by leveraging Canada's resource abundance to obtain low cost and secure energy and minerals that the American economy requires, especially if one wants to achieve energy affordability and energy dominance," Wilkinson said in his speech Feb. 4.

"With a tariff on Canadian oil and gas, Americans would see higher prices when filling up their gas tanks and heating their homes."

Wilkinson also emphasized the benefits to the US of having a critical minerals partnership with Canada.

"Canada supplies significant quantities of critical minerals, including germanium, zinc, nickel, copper, and graphite," Wilkinson said. "These are the building blocks for a range of American economic sectors, including defense. Typically, the alternative source of supply to Canada is China."

The Mining Association of Canada recently told S&P Global that miners do not see US tariffs as much of a threat due to demand from all over the world. Wilkinson emphasized this point as well.

"There are lots of other markets for Canadian critical minerals," he said. "So, I don't think that we would have a lot of trouble finding markets for Canadian zinc, nickel, germanium and a range of different things like that."

Wilkinson also stressed the integrated pipeline system between Canada and the US, noting that Canada supplies Americans up to 4 million barrels of oil per day.

"This is by far the most affordable option for American companies and consumers, and it enables the export of US light crude to countries around the world, creating additional profit for American companies, but also creating additional tools to be used in the context of geopolitics," he said.

Because of existing infrastructure, it is more difficult for Canada to export oil and gas to countries outside the US, Wilkinson said.

Wilkinson said the tariff threat has made some Canadians question infrastructure partnerships with the US.

"I do think in Canada, this has caused some reflection on whether, perhaps in some areas, we are too dependent on infrastructure in particular that flows only through the United States," he said.