Uranium, Crude Oil, and Potassium Highly Dependent on US
Considered as Last Resort... Costs Rise for US Consumers, Farms, and Businesses
Bloomberg reported on the 12th (local time) that Canada is considering imposing export tariffs on raw materials such as uranium, crude oil, and potassium in response to the tariff threats made by President-elect Donald Trump of the United States.
According to sources familiar with internal discussions within the Canadian government, if a full-scale trade war breaks out, Canada is expected to consider the export tariff card on raw materials as a last resort. This would increase costs for American consumers, farmers, and businesses. However, these sources believe that retaliatory tariffs on American goods and export controls on certain Canadian products are more likely to be implemented first.
President-elect of the United States Donald Trump (left) and Canadian Prime Minister Justin Trudeau. Photo by AFP Yonhap News
Sources said that the Justin Trudeau government may propose expanding government authority related to export controls in the national fiscal and economic assessment to be announced on the 16th.
Earlier, on the 25th of last month, President-elect Trump declared that he would impose a 25% tariff on Canada and Mexico citing issues related to drugs and illegal immigration.
Canada is the largest oil supplier to the United States. In particular, refineries in the U.S. Midwest heavily depend on inexpensive Canadian heavy crude oil, relying on Canada for half of their crude oil supply. Bloomberg forecasted that imposing export tariffs on Canadian oil could severely impact the U.S. Midwest region.
Additionally, Canada is the largest overseas supplier of uranium to U.S. nuclear power plants, providing about one-quarter of the supply. U.S. nuclear power plants have a high dependence on uranium imports. Potassium produced in western Canada is also a major fertilizer source for American farms. The U.S. Department of Defense has invested in Canadian related businesses to secure sources of cobalt and graphite and reduce dependence on Chinese supply chains.
Accordingly, some have predicted that even if President-elect Trump imposes a 25% tariff on Canada and Mexico, raw materials would be excluded, targeting only manufacturing products such as automobiles, aerospace, and aluminum. However, sources believe that even if President-elect Trump does not impose tariffs on raw materials, if tariffs are imposed on other products, Prime Minister Trudeau would have no choice but to respond.
However, Bloomberg pointed out that if the Canadian government imposes export tariffs, serious political divisions could arise within Canada. Oil, uranium, and potassium production are concentrated in the western provinces of Alberta and Saskatchewan, regions that support the opposition Conservative Party.
In 2018, when the first Trump administration announced additional tariffs on Canadian steel and aluminum, Canada retaliated by imposing tariffs on American imports. The retaliatory tariff items included yogurt and whiskey, which were specialty products from the hometowns of the U.S. federal Senate and House leaders.
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