HOUSTON — Canadian officials were caught in the middle of trade war whiplash at one of the world’s top energy conferences Tuesday, causing them to reexamine their country’s relationship with the United States.
At CERAWeek by S&P Global, regional energy ministers from across Canada expressed frustration with President Donald Trump’s morning announcement that he would increase tariffs on Canadian steel and aluminum to 50 percent. Trump had already placed a 25 percent tariff on Canadian goods, except for a lower 10 percent tariff on energy resources.
But by Tuesday afternoon, the White House declared that tariffs on Canadian steel and aluminum were back down to 25 percent, leaving energy leaders scratching their heads and underscoring uncertainty about what the global energy industry can expect from Washington. There wasn’t a consensus on how — or when — the U.S. trade standoff with Canada might end.
“And where do we stop? Are we going to have 100 percent, 200 percent, 300 percent tariffs? Are we going to block the border?” asked Brian Jean, minister of energy and minerals for the Canadian province of Alberta. “Why would you do this to your best friend?”
Tariffs on raw materials and goods are expected to drive up the cost of new energy and electricity infrastructure, while tariffs on energy products could result in Americans paying more to fill their cars, heat their homes and keep the lights on.
Tuesday’s whirlwind began with a morning post on Truth Social, where Trump said he would increase tariffs on Canadian aluminum and steel to 50 percent in direct response to Ontario Premier Doug Ford’s implementation of 25 percent tariffs on electricity exports to the United States. The way to make tariffs disappear, Trump said, would be for “Canada to become our cherished Fifty First State.”
Incoming Canadian Prime Minister Mark Carney said Tuesday that his country will keep its tariffs in place “until the Americans show us respect and make credible, reliable commitments to free and fair trade,” according to the Associated Press.
By Tuesday afternoon, Ford had already agreed to lift the electricity tariffs, which affected about 1.5 million homes and businesses in Michigan, New York and Minnesota and were estimated to cost between $300,000 and $400,000 a day, according to the Ontario government. Ford said in a statement that he would meet with Commerce Secretary Howard Lutnick on Thursday.
In a letter Tuesday, Ontario’s energy and electrification minister — Stephen Lecce — said his Canadian province retains the ability to reinstate the tariff at any time. Overall, Canada is the top source for U.S. electricity imports, although they account for less than 1 percent of total domestic electricity consumption.
In a statement to POLITICO’s E&E News, White House spokesperson Kush Desai, said the reversal in the Canadian electricity tariffs was a sign that Trump’s strategy was working.
“President Trump has once again used the leverage of the American economy, which is the best and biggest in the world, to deliver a win for the American people,” Desai said Tuesday. “Pursuant to his previous executive orders, a 25 percent tariff on steel and aluminum with no exceptions or exemptions will go into effect for Canada and all of our other trading partners at midnight, March 12th.”
By mid-Tuesday, though, Canadian leaders said the dispute had brought their country closer together — and had national leaders thinking about how to expand the country’s trading relationships outside of the United States.
“Don’t be surprised if you see a lot of trade missions move beyond North America,” Lecce said.
That includes sending more crude to the Tidewater Canada facility — a major transporter of the country’s refined petroleum products via Canada’s West Coast — and building more pipelines to send petroleum products across the country. Lecce said the reevaluation of trade relationships could break down interprovincial trade barriers and help the country stand more firmly as a “strong economic unit.”
“There’s a variety of economic theories that suggest that there’s billions of dollars left on the table every year because we don’t move goods east and west,” Lecce said during a CERAWeek panel. “Our preoccupation is north and south.”
Scott Moe, the premier of the Canadian province of Saskatchewan, said the current disruption marked a pivot point for the country to think about its future work with its neighbor to the south — even as the country gears up for a 2026 renegotiation of the United States-Mexico-Canada Agreement that was implemented in 2020.
A trade war, Moe said, “does nothing to benefit the North American family.”
“It would do us all well to think about what we want this relationship — this North American relationship — to look like when the dust settles and all of us start making decisions to get us to that point,” Moe said.
Jean with Alberta said his office was not looking to impose retaliatory tariffs by placing them on the roughly 4 million barrels of crude it exports to the United States per day. Instead, he said, Albertan officials want to “deescalate the situation,” although he did not know how long that might take.
“Well, like all the negotiations, it depends on both partners. But I can tell you I would like to have dropped the tariffs yesterday,” Jean said.
‘Chaotic action’
At a time when North American electricity demand is rising and developers say they will need to rapidly build new power plants and power lines, a price increase on steel and aluminum could present a significant hurdle. The two materials are crucial to build equipment like pipelines, transformers and transmission lines, to say nothing of their contributions to new vehicles.
Hitoshi Kaguchi, president of Mitsubishi Heavy Industries’ energy transition arm known as GX Solutions, said Tuesday that tariffs — and threats of tariffs — injected uncertainty into the planning process to build new energy infrastructure.
“Free trade is essential for us,” Kaguchi said at a panel Tuesday.
In an interview, Máximo Vedoya, CEO of the steel manufacturer Ternium, said the tariffs “don’t make a lot of sense,” especially because the U.S. exports more steel to Mexico than it takes in.
While Vedoya said that he understood the impulse to boost the U.S. market against competition from China, he said a more productive approach would be to have like-minded countries work together to support the steel industry so it can meet an expected boom in demand.
“It should be kind of natural to work together in the ultimate goal that is bringing manufacturing back to the U.S. and to the region,” Vedoya said. “Production and manufacturing has to come back. The steel industry is investing and is growing in North America.”
Tuesday’s tariff drama came a day after a steep drop in the stock market, fueled by fears of a potential recession, and on the tail end of a whirlwind first seven weeks of the Trump administration. U.S. stock indices then fell again Tuesday.
Energy Secretary Chris Wright used a speech Monday to tout the administration’s support for producing more energy of all kinds, but the rapid policy moves have still rattled the CERAWeek conference.
At a panel featuring influential energy trade groups late Tuesday afternoon, moderator Jim Burkhard with S&P Global demurred before asking about the tariffs.
“I feel kind of embarrassed about bringing it up, because it changes by the minute — literally — but trade policy tariffs,” he said.
Mike Sommers, CEO of the American Petroleum Association, responded that it’s easy for companies and markets to react swiftly to announcements and executive orders like those seen Tuesday. He urged caution and patience in those reactions.
“A perfect example is what we’ve witnessed just in the last 12 hours where there was a negative reaction in Canada, the president responded in kind and before the markets closed today there was a resolution,” Sommers said. “So I think all of us have to be prepared for this kind of chaotic action. We elected a disruptor.”
Paul Bledsoe, a lecturer at American University and a former Clinton White House climate official, said in an interview at the conference that the Trump administration’s overall energy policy has been “out of step with where any of the energy industries have been expecting.”
Moves to reduce support for renewable energy while encouraging both foreign and domestic fossil fuel supply, he said, do not work together to lower energy prices at home or to support American companies. The short-term disruption, Bledsoe said, has been on the minds of energy executives in sideline conversations at the conference.
“In the long run, they think it’s going to be fine,” Bledsoe said. “But in the short run, what’s going on?”
