Canada's Energy Gambit: A Risky Move in the Trade War

Canada's energy resources are being considered as a potential tool for retaliation against the US in the ongoing trade war. However, this idea is 'exceedingly stupid' according to Charles St-Arnaud, chief economist at Servus Credit Union. He argues that using oil exports as leverage would have severe consequences for both Canada and the US economies.

The Canadian government has been weighing the option of imposing export levies or restrictions on its energy resources, but St-Arnaud warns that this would be impractical due to the country's reliance on US pipeline networks. Canada exports 85% of its oil production to the US, and diverting production to other markets is not feasible.

St-Arnaud also points out that an export tax may seem like a less severe measure, but it would still have significant impacts on the Canadian economy. The US could retaliate by reducing flows or imposing a tax on Canadian oil, affecting refineries in Ontario and Quebec. This could result in a severe recession in these provinces.

In the long term, Canada's energy exports to the US may be severely impacted if alternative suppliers are found. Finding new markets for the 4.5 million barrels per day exported to the US would require significant investment and take years, according to St-Arnaud.