Trump: US Doesn't Need Canada          08/27 06:18

   

   TORONTO (AP) -- U.S. President Donald Trump says his country does not need 
Canada. But every day, roughly 4 million barrels of Canadian crude oil flow 
south, helping fuel American cars, trucks and airplanes and supply U.S. 
industry.

   And oil is only the beginning.

   Canada also supplies aluminum, potash to U.S. farms and parts for an auto 
industry built on both sides of the border.

   "WE DON'T NEED CANADA, THEY NEED US!" Trump posted this week, repeating his 
long-running claim.

   Yet Trump has imposed a 50% tariff on Canadian aluminum while acknowledging 
this week that the United States badly needs the metal.

   "This country desperately needs aluminum," Trump said. "We don't have it. We 
get it all from Canada for the most part, and we need it badly."

   The contradiction underscores how deeply the two economies remain 
intertwined -- and how much could be at stake if Trump's trade war reaches more 
of the energy, materials and supply chains that the U.S. still relies on Canada 
to provide.

   Canada fuels American industry

   Canada is the second-largest U.S. trading partner after Mexico, and energy 
is at the heart of that relationship.

   The two countries exchanged about $872 billion in goods and services last 
year. Canadian crude imports equal nearly 20% of total U.S. petroleum 
consumption, according to the U.S. Energy Information Administration, part of 
the Department of Energy.

   Daniel Bland, a political science professor at McGill University, said 
Trump's claim that the U.S. doesn't need Canada is "absolutely false," citing 
U.S. reliance on Canadian oil and natural gas and deeply integrated industries 
such as autos.

   Much of Canada's crude flows to Midwest refineries built to process its 
heavy oil into gasoline, diesel and jet fuel.

   Energy also explains much of the U.S. trade deficit with Canada, which Trump 
frequently cites as evidence of an unfair relationship.

   The White House this week portrayed the relationship in starkly negative 
terms, saying Canada had taken roughly $50 billion a year from the U.S. over 
the past decade. Much of that gap reflects U.S. purchases of Canadian energy, 
which helps power the U.S. economy. And Canada's heavy crude typically trades 
at a discount to U.S. benchmark oil, according to the U.S. Energy Information 
Administration.

   Energy more than accounted for last year's $48.3 billion goods deficit. 
Without energy, the U.S. would have run a trade surplus.

   After trade talks collapsed last Friday, the U.S. imposed 50% tariffs on 
about $20 billion worth of Canadian goods. The measures cover only about 5% of 
Canadian exports to the U.S. and exclude energy.

   Canadian politicians debate using energy exports as leverage

   For now, using oil as a weapon in trade negotiations remains a remote 
possibility. Alberta Premier Danielle Smith strongly rejected using oil as 
leverage, saying she could not think of "a more disastrous policy decision" 
than cutting off or taxing Alberta crude exports to the U.S. because it could 
devastate Canada's economy.

   But former Alberta Premier Jason Kenney said Canada should not rule out 
export taxes on oil, fuel or potash if Trump escalates further.

   Such retaliation "would affect Republicans who drive F-150s and lay 
fertilizer on their farm fields," Kenney said.

   "They should be mindful that if they really want to escalate, it will not 
end well for the American economy two months before midterm elections," he said.

   Ontario Premier Doug Ford cited Canadian commodities as leverage, accusing 
Trump of "putting out fake news" about the U.S. not needing Canada. He called 
potash used by U.S. farmers "one of the most powerful tools we have" and said 
Washington would have to turn to suppliers such as Russia if Canada redirected 
shipments.

   Saskatchewan Premier Scott Moe rejected that approach, saying his province 
"cannot and will not support" export tariffs on resources. He said Saskatchewan 
is on track to supply about half the world's potash and warned that taxing 
exports could cost Canadian jobs, raise fertilizer prices and push U.S. buyers 
toward suppliers such as Belarus.

   "This would be a tremendously flawed policy on behalf of Canadians," Moe 
said.

   Moe has backed a more targeted retaliation, saying Saskatchewan -- one of 
only two provinces that had not removed existing U.S. alcohol from store 
shelves -- will impose a 50% reciprocal charge on U.S. alcohol, starting on 
Sept. 8.

   Kenney stopped short of advocating an export tax on oil, and Bland said 
such a move would probably be "a very divisive issue politically in provinces 
like Alberta and Saskatchewan."

   That underscores the limits of Canada's leverage: measures aimed at hurting 
U.S. industries could also hurt Canadian producers and strain political unity 
at home.

   From pickup trucks to farm fields

   Canada has long been the dominant foreign source of aluminum for the U.S. 
Smelting the metal requires enormous amounts of electricity, giving hydro-rich 
Canada a major advantage.

   Prime Minister Mark Carney told a New York business audience in May that 
Canadian aluminum exports to the U.S. are "the energy equivalent of 10 Hoover 
dams."

   American farmers are even more dependent on Canada for potash, a fertilizer 
essential to crops such as corn and soybeans. More than 80% of U.S. potash 
imports come from Canada.

   Even Trump's ambassador has disputed the idea that the U.S. needs nothing 
from its neighbor.

   "America has a tremendous amount of things where we have a need," Ambassador 
Pete Hoekstra said in June. Pointing to Canadian fertilizer supplies, he added: 
"We need potash."

   Then there are cars.

   Canada and the U.S. have built an integrated auto industry in which parts 
can cross the border up to six times before final assembly, according to the 
Canadian government.

   Trump said Monday that his administration would impose 50% tariffs on 
Canadian cars, trucks and auto parts starting Jan. 1, 2027 -- after the 
November midterm elections.

   That means a tariff aimed at Canada can land in Michigan or Ohio. Tax 
Canadian aluminum and an American automaker may pay more for metal. Tax 
Canadian parts and the cost of assembling an American vehicle can rise.

   AI needs power. Canada has it

   Artificial intelligence is driving a surge in electricity demand. Canada 
supplied 85% of U.S. electricity imports in 2023, according to the Canada 
Energy Regulator, and Carney says the country needs to double the capacity of 
its electricity grid by 2050 through major hydroelectric and nuclear projects.

   Carney said Canada could help the U.S. "meet exploding demand to power AI."