By Paul Vieira


OTTAWA--Canada should brace for tariffs on all U.S.-bound exports, including crude oil and energy products, starting on Jan. 20, says the premier of the country's resource-rich province of Alberta, after meeting President-elect Donald Trump and his senior aides over the weekend.

"I'm not expecting any exemptions. I'm expecting that we're going to have a lot of work to do in arguing why this special relationship that we have with the United States should continue," Danielle Smith told reporters on Monday, after she spent part of the weekend at Trump's club in Mar-a-Lago, Florida.

Smith is now the first provincial premier, or governor, to meet with Trump officials at his Florida club. Outgoing Canadian Prime Minister Justin Trudeau, along with senior aides and his then-security minister, met with Trump in Mar-a-Lago in late November, days after the President-elect pledged to slap a 25% tariff on all Canadian imports. Smith said she went to Mar-a-Lago at the invitation of Canadian entrepreneur and "Shark Tank" co-host Kevin O'Leary.

She said she had a friendly, constructive conversation with Trump, with an emphasis on an energy partnership between the two North American countries. She said talks with other members of the incoming administration were also positive.

For the 12-month period ended Nov. 30, Canada exported roughly 142 billion Canadian dollars, or the equivalent of $98 billion, of crude oil, with the bulk of it destined for U.S. refineries. Crude oil accounts for nearly 20% of all goods that Canada ships abroad.

Canada's cabinet is drawing up a list of possible U.S. imports that would be hit with retaliatory tariffs in the event that Trump follows through on his 25% tariff threat. Trump initially said the outsize tariff would be in place until Canada fortifies its border security. Since then, Trump has complained about the trade deficit the U.S. runs with Canada, and has said he's prepared to use "economic force" to compel Canada to be the 51st state.

She said she expects Canada to retaliate, but warned of severe repercussions for the Canadian economy.

"I feel like it would be mutually damaging to have 25% tariffs across the board on U.S. goods coming into Canada that would harm Canadian citizens at a time when we have an affordability crisis," she said. "We are the ones who [will be] really harmed if we try to get into any kind of prolonged trade and tariff war."

This view is shared by Avery Shenfeld, chief economist at CIBC Capital Markets. Retaliatory tariffs, he said, would inflict pain on Canadian consumers, or businesses that used inputs produced in the U.S. to make final products." He added data indicate that, as a share of gross domestic product, only one U.S. state, North Dakota, depends more on U.S.-Canada trade than the least dependent Canadian province.

"The problem is that Trump likely understands that, in a bilateral tariff war, this is gonna hurt us more than it hurts him," Shenfeld said.

Smith said she believes that reinforcing the energy relationship between the U.S. and Canada could lead to Trump backing off or repealing tariffs. Research from Montreal-based National Bank Financial said that when energy is excluded, the U.S. runs a trade surplus with Canada due in part to U.S. services exports.

"I just feel like the more we make those arguments, slowly but surely, we'll be able to make the case that we should continue to enjoy a tariff-free relationship. But I don't want to raise any expectations," Smith said.


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


(END) Dow Jones Newswires

01-13-25 1058ET