By Jarrett Renshaw and Arathy Somasekhar
HOUSTON (Reuters) -Canada could impose non-tariff measures such as restricting its oil exports to the United States or levying export duties on products if a trade dispute with the U.S. escalates further, Canada’s energy minister Jonathan Wilkinson said on Tuesday.
“When we are talking about non-tariff retaliation, it could be about restricting supply, it could be putting our own export duties on products. It could be energy and minerals, it could be broader than that,” Wilkinson said in an interview with Reuters.
He also raised the possibility of using non-tariff measures on critical minerals, which could force the U.S. to rely even more heavily on China.
“Everything is on the table,” he said.
Canada is the top supplier of imported oil to the United States, providing around 4 million barrels per day mainly to refineries in the Midwest that are largely engineered to run its grades.
U.S. President Donald Trump on Tuesday ramped up the burgeoning trade war with Canada, vowing to double tariffs set to take effect within hours on all imported steel and aluminum products from America’s northern neighbor to 50% – although he later said he would likely lower them after Canadian officials agreed to talks.
Trump’s latest salvo followed Ontario Premier Doug Ford’s announcement that he would place a 25% surcharge on the electricity Canada’s most populous province supplies to more than one million U.S. homes unless Trump drops all tariff threats against Canada’s exports into the U.S.
Ford later agreed to suspend the surcharge and meet with U.S. Commerce Secretary Howard Lutnick on Thursday, calling for cooler heads to prevail.
Alberta’s energy minister, Brian Jean, whose province is home to the bulk of Canada’s oil industry, said earlier on Tuesday he wants to de-escalate the dispute, and had provided several options to Washington to do so.
Any restrictions on Canada’s oil exports to the United States would hurt Canadian producers as Canada is limited in its options to send oil to other markets.
“By and large, you couldn’t displace the 4 million barrels that we send to the United States in pipelines, but I would say it works on the other side of the bucket too,” Wilkinson said, citing some additional capacity on the Trans Mountain pipeline and rail as alternatives to move some of the Canadian oil.
“I actually think the oil coming down here (to the United States) in pretty sticky and I don’t think it’s displaceable and in that regard I don’t think the threat to Canada’s producers in the oil sector is as significant as perhaps in other sectors,” he added.
Wilkinson told Reuters Canada is considering imposing tariffs on U.S. ethanol as part of a second tranche of trade penalties if Trump continues to escalate the trade war.
U.S. ethanol, a crucial trade product for U.S. farmers, is “absolutely on the list of things” that could be included if Trump, for example, moves forward with plans to impose 25% tariffs on Canadian goods in April, Wilkinson said.
Canada has threatened retaliatory tariffs on $155 billion of U.S. imports. Officials identified an initial tranche of $30 billion of goods that would face tariffs but said the remainder of the list is under consideration.
U.S. ethanol exports to Canada hit record highs in recent months to help Canada meet its clean fuel program. It is cheaper than Canadian ethanol, Wilkinson said, due to subsidies in the U.S. Renewable Fuel Standard.
U.S. farmers sent a record 1.54 million gallons of ethanol to Canada in September of last year, roughly double the figure three years prior, according to the U.S. Energy Information Administration.
“We started the day in one place. Things kind of went sideways in a number of directions, and we ended up back at the same place that we were yesterday,” Wilkinson said of the rapid-fire moves that scrambled financial markets.
“I think it’s important that we get to an outcome that involves removing the tariffs very soon.”
(Reporting by Jarrett Renshaw and Arathy Somasekhar in Houston; Editing by Nia Williams and Lincoln Feast.)
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