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Trudeau slams proposed border tax, stresses importance of Canada–U.S. trade relations

Prime Minister Justin Trudeau travelled to Houston on Thursday where he was honoured at an energy conference for his promotion of energy projects with environmental stewardship.

Sean Kilpatrick/THE CANADIAN PRESS

Prime Minister Justin Trudeau slammed the Republican proposal for a new border tax Thursday, telling an energy conference in Houston such a levy would hurt both Canada and the United States.

Mr. Trudeau was a keynote speaker at IHS Markit's CERAWeek conference in Houston, addressing a dinner crowd of some 1,200 executives and politicians from around the world. He used the platform to reinforce Canada's image as a critical trading partner whose access to American markets benefits people in both countries.

In a question and answer period after his speech, the Prime Minister was asked about the prospect of a border adjustment levy, which Republican leaders in the House of Representatives are proposing as part of broader tax changes.

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Related: Possible border tax would hurt business in Canada, U.S.: Freeland

"Anything that creates impediments at the border – extra tariffs, new taxes – is something that we're concerned about," he said.

Mr. Trudeau pointed to the auto industry, which moves parts across the border several times in the process of assembling vehicles. "If you are planning on having bean counters count each of those transits and lay taxes on top of each one, you're going to be hurting not just the Canadian economy but the American economy as well."

The Prime Minister called the Canada-U.S. partnership "the most successful economic relationship in the world."

He noted Texas alone exports $20-billion (U.S.) worth of goods to Canada, with the two-way trade accounting for 460,000 jobs.

The Liberal government is walking a political tightrope as it seeks to win favour with the Trump administration to head off protectionist action, even as it takes a separate path on sensitive issues such as climate change and refugee policies.

The Prime Minister arrived in Houston amid new threats from Washington where President Donald Trump is championing protectionist policies that will reinvigorate the manufacturing sector.

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Commerce Secretary Wilbur Ross said this week Canada will have to make concessions as the two countries and Mexico renegotiate the North American free-trade agreement. Canadian political and industry leaders also worry about congressional proposals to impose a 20-per-cent import levy.

Mr. Trudeau decried the protectionism that is being put forward by the Trump administration as an answer to the declining fortunes of many middle-class Americans.

At the same time, the two governments are taking divergent paths on energy and climate change policy. Those differences came into sharp focus Thursday when the new administrator of the Environmental Protection Agency expressed skepticism about the human role in global warming, and suggested his agency does not have legislative authority to regulate greenhouse gas emissions.

While several oil industry executives hailed the Trump administration's plan to roll back climate and other environmental regulations at the CERAWeek gathering this week, Mr. Trudeau insisted said Canada is committed to a strong industry even as it reduces greenhouse gas emissions.

"There is no path to prosperity in Canada that does not include a thriving, vibrant energy sector, both traditional and renewable," he said. But he reiterated his view that there will be a transition off fossil fuels and that Canada must prepare for the day "far off but inevitable, at some point, when traditional energy sources will no longer be needed."

New questions arose Thursday about the long-term health of the oil sands sector as Royal Dutch Shell PLC sold its assets there to Calgary-based Canadian Natural Resources Ltd. for $8.5-billion (U.S.).

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Prior to his speech, Mr. Trudeau met with 18 senior business leaders representing the technology and renewable side of the energy business. Among them were representatives from General Electric Co.; Honeywell International Inc; Emerson Electric Co.; Schneider Electric SE and BP PLC.

GE has been a leading corporate advocate in the U.S. for the proposed border adjustment tax. Republican leaders in the House of Representatives are pushing the measure, though there is stiff opposition even within their own party.

Natural Resources Minister Jim Carr – who has spent the week in Houston – said he spoke to a host of energy executives during the week and found no support for a border levy. "They're free traders – and they offered that without any prompting. And they think that border tax would not be good for an integrated energy economy."

Tim McMillan, president of the Canadian Association of Petroleum Producers, said it was important for the Prime Minister to remind the business audience of the importance of the bilateral relationship.

But Mr. McMillan worried that Ottawa and Washington are on different paths with regard to climate change.

"Any time that there are substantial differences in direction between two countries that are so closely connected, it's something we can't take lightly," he said in an interview. "If we ignore the realities of our largest customer and trading partner, it will not serve us well."

Editor's note: A previous version of this story on Prime Minister Justin Trudeau and the U.S. border tax included an incorrect spelling for the name of the president of the Canadian Association of Petroleum Producers. He is Tim, not Tom, McMillan.

Video: While Trudeau and Trump praise Canada-U.S. trade agreements, the president adds ‘we’ll be tweaking it’
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About the Author
Global Energy Reporter

Shawn McCarthy is an Ottawa-based, national business correspondent for The Globe and Mail, covering a global energy beat. He writes on various aspects of the international energy industry, from oil and gas production and refining, to the development of new technologies, to the business implications of climate-change regulations. More

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