By Paul Vieira


OTTAWA--Canadian Prime Minister Justin Trudeau and nearly all of the country's provinces agreed to retaliate forcefully against the U.S. should President-elect Donald Trump proceed with his threat to impose a 25% tariff on all Canadian imports.

One big exception was the resource-rich province of Alberta. Premier Danielle Smith said federal officials are still considering measures such as cutting off energy supply to the U.S. and imposing export taxes on key commodities in a possible trade row. Alberta can't agree to such measures, she said, and would take all action necessary to protect the province "from such destructive federal policies."

The domestic row on how best to fight a trade war with the U.S. underscores the difficulty Canada faces in mounting retaliation against its neighbor and the world's biggest economy. About three-quarters of all Canadian exports are U.S.-bound, and those sales account for roughly 21% of the country's gross domestic product.

Politicians like Smith, and some economists, warn Canada's economy faces serious damage from a 25% U.S. tariff coupled with domestic retaliation. Consumers in Canada, and the U.S., would pay more for goods, and the budget deficit in Ottawa would balloon.

Talk of a "broad-based tariff war is not good for Canada," said Scott Moe, the premier of Saskatchewan, another commodity-rich province. "Canada does not do well in that environment. I would say North Americans will not do well."

At a press conference Wednesday featuring Trudeau and the leaders of Canada's 10 provinces and three territories, the prime minister said most provinces agreed to explore and use every option available, if necessary, to persuade the Trump administration to repeal tariffs against Canada. Officials didn't specify which U.S. goods Canada might target with retaliatory tariffs.

Earlier Wednesday, some provincial leaders said Canada should consider limiting the sale of some commodities such as crude oil, nickel, aluminum and potash to the U.S. as part of its broad trade retaliation.

"Everything is on the table," Trudeau said. "If the U.S. administration chooses to still implement tariffs, we will respond. Purposely. Forcefully. Resolutely."

Canada's minister of natural resources, Jonathan Wilkinson, told The Wall Street Journal earlier Wednesday that he was somewhat uncomfortable with the idea of blocking energy sales to the U.S.

"I don't think threatening to cut off energy to the U.S. at the front end of this is a particularly productive thing to do," Wilkinson said.

However, Wilkinson said he was relatively more comfortable with an export tax, which Canadian officials have said they are mulling.

"That's certainly less confrontational," he said.

Wilkinson said a 25% tariff on Canadian crude oil may lift the cost of a gallon of gas by 75 cents in the U.S. Midwest. Nearly all of Canada's crude oil exports head to the U.S.

Trudeau said that most provincial leaders agreed that no region or specific industry should carry the burden in a U.S. trade row, and federal officials would consider financial support should certain sectors struggle. Trump's tariff threat is "not a potential challenge for one particular segment of our economy or one particular region in this country," Trudeau said. "This is an attack, or an approach, that endangers all Canadians and all of Canada."

Trudeau added Canada's response to a hefty U.S. tariff would be to identify "what we can do that results in the lifting of those tariffs as quickly as possible."


Write to Paul Vieira at paul.vieira@wsj.com


(END) Dow Jones Newswires

01-15-25 1812ET