Where I come from, we have a saying: "Don't be afraid of a dog that barks because it doesn't bite." Following the recent TACO incident at Davos regarding Greenland, one could arguably say the same about Donald Trump. The fact is, he has imperial ambitions, a childish attitude towards rejection, and an agenda he must fulfill before the midterms. However, he also has limits on what he can achieve through coercion. Apparently, some international rules still apply, even to a bully like him—remnant rules of the world order that Carney rushed to put to rest in Davos, including the American assets in European hands. But Canada is not the EU; it is an isolated neighbor to an indebted superpower that, for instance, requires vast amounts of energy to maintain its AI supremacy. And Canada possesses that energy. However, is Canada to the U.S. what Ukraine is to the Russian Federation? Is it breakfast?
Then, I read the news about his new threats against us. Trump threatened to impose a 100% tariff on all Canadian goods if Carney moves forward with a trade deal with China. This fervent declaration, issued on his social media platform Truth Social, marks a significant escalation in tensions between him and Canada. It raises serious concerns among Canadians about the future of national sovereignty, reflecting not only a willingness to undermine Canada's economy but also a disturbing expectation that he can dictate policy to a middle, yet still sovereign, power. Nonetheless, Carney later posted an ad online reiterating that the government's response to economic threats will continue to focus on what it can control.
Additionally, you have various cadres stirring the pot of political intimidation and coercion, such as U.S. Treasury Secretary Scott Bessent, who expressed support for Alberta's separatist movement, describing the province as a "natural partner for the U.S." due to its natural resources. His comments coincided with efforts in Alberta to collect signatures for an independence referendum. However, Carney has already dealt with this issue preemptively by making a deal for pipeline development with Alberta Premier Danielle Smith that she could not refuse. Moreover, to Trump's dismay, most Albertans do not wish to become a U.S. state. A petition last year collected over 430,000 signatures advocating for a united Canada, with polls suggesting that a majority of Albertans prefer to remain part of Canada.
Is the energy required for AI the reason the U.S. wants Canada?
Indeed, Canada’s abundant energy resources are a primary driver of U.S. interest, and energy security for AI has become a major national issue for the U.S. To begin with, the U.S. AI industry is projected to require roughly 90 additional gigawatts of power to avoid throttling data center growth. Experts note that building dozens of new nuclear plants in the U.S. is not a viable short-term solution, leading them to suggest Canada as the best alternative. Canada’s "secret sauce" for AI lies in its vast supply of hydroelectric, nuclear, and natural gas power. Over 80% of Canada's grid is non-emitting, making it attractive for tech giants like OpenAI, Amazon, Google, and Microsoft, who have pledged to reduce emissions. At the same time, major U.S. tech companies are actively discussing or building AI data centers in Canada to leverage this clean energy. As of early 2026, roughly 240 data centers are operational in Canada, with dozens more under regulatory review.
If that’s the case, can energy become a diplomatic and economic lever in bilateral talks?
Energy is a negotiating card, even after the Venezuelan incident that marked a slow resurgence in oil production in South America. Yet, despite the strategic need for Canadian power, trade disputes and tariffs in early 2025 initially complicated bilateral cooperation. Moreover, because of Trump's behavior, Canada is simultaneously working to build its own "sovereign cloud" to ensure its data infrastructure is governed by Canadian law rather than foreign-controlled firms. As global data center energy consumption is expected to double by the end of 2026, driven primarily by AI workloads, by 2030, if all proposed projects are approved, data center energy needs could account for up to 14% of Canada's total power demand.
Is there anything we can do to turn American threats to our advantage?
Canada can employ defensive and strategic measures as leverage during negotiations and to build long-term resilience. After all, tariffs are paid by the American importer, but the costs are largely passed on to U.S. consumers. Canada’s main strategy should involve using reciprocal tariffs and emphasizing shared economic reliance to pressure the U.S. into negotiations. For example, it can impose dollar-for-dollar tariffs on specific American goods, such as Kentucky whiskey or California wine, targeting politically sensitive U.S. industries to create negotiating leverage. Yet, I suspect that blue states will not be targeted by Canada for obvious reasons. Instead, it may prove more politically viable if Canada restricted essential energy supplies to red states as an extreme negotiating tactic, impacting U.S. energy prices and reliability. Lastly, to reduce vulnerability to U.S. trade shocks, Canada can focus on expanding trade networks with other countries (e.g., in Asia and Europe) and increasing inter-provincial trade.
Impact on Canadian Electricity Exports
At this point, it is essential to explain to Americans the implications of Trump's threats. Tariffs on Canadian electricity exports will primarily lead to higher prices for U.S. consumers in affected regions. The U.S. has already imposed a 10% tariff on Canadian energy products, with the potential for an increase. A 25% tariff on electricity exports would equate to an additional cost of approximately $9 to $22 per megawatt/hour. U.S. households in border states that rely heavily on Canadian power would bear the brunt of these costs. For example, a 25% tariff could cost an average household in Maine an extra $269 annually, while New York households might see an additional $25 per year.
Additionally, the U.S. grid is interconnected with Canada’s; losing access to Canadian imports could create significant reliability challenges during peak demand periods, such as the summer months. Perhaps it is time for a serious Canadian response to Trump’s barking. Provinces like Ontario have previously considered, and temporarily implemented, surcharges on electricity exports to the U.S. in retaliation, using the generated revenue to support local businesses and workers. However, this strategy also risks reducing demand for Canadian electricity and could create potential supply chain issues for components needed for the Canadian grid.
Canada must seek stronger alliances to safeguard its sovereignty and economic autonomy
Given the increasing hostility from the U.S., it may be prudent for Canada to seek diplomatic and military support from Europe or NATO. Additionally, it could also initiate what Carney referred to as a bloc of middle powers. Such alliances could serve as a bulwark against Trump's unilateral threats and potential economic coercion. By collaborating with European nations and leveraging NATO or other partnerships, Canada could strengthen its position and promote a collective response to any aggressive actions from the U.S.
No comments:
Post a Comment