November 29, 2024
In the fourth week of the Alberta Legislature’s fall session, debates are intensifying around two major developments. First, we’re tracking reactions to U.S. President-Elect Donald Trump’s announcement of a proposed 25 per cent tariff on all goods exported from Canada and Mexico, citing that activities at both borders have resulted in increased illegal immigration and drug movement into the U.S. Second, we’re closely monitoring the Alberta Government’s decision to invoke the Alberta Sovereignty Within A United Canada Act in response to Ottawa’s proposed federal emissions cap on oil and gas producers.
What We're Watching
Terrible Tariffs: What Trump's Proposed Policy Could Mean for Alberta and Canada
On Monday, U.S. President-Elect Donald Trump announced via his platform, Truth Social, that all products exported from Canada and Mexico would be subject to a 25 per cent tariff. This move is a response to what he claims are both country’s “open borders” contributing to illegal immigration and drug trafficking.
While it remains uncertain whether these proposals will become official policy, Canada’s Premiers quickly voiced concerns over Trump’s statement. Adopting a more collaborative tone with U.S. counterparts, Premier Danielle Smith has urged the federal government to collaborate with the incoming U.S. administration to address valid concerns on border security. Smith has expressed relief that Alberta’s primary export to the U.S. – oil and gas – is exported via pipelines that have no link to illegal border activities. However, not one to rest on her laurels, Smith has also moved to address U.S. concerns directly should Ottawa not take the threat seriously. She has noted that Alberta is working to develop a plan on how to best patrol its border with Montana, citing the option to create an “Alberta border patrol” unit based on an existing specialized sheriff’s unit. Furthering these efforts, Deputy Premier and Minister of Public Safety and Emergency Preparedness, Mike Ellis, has said he is engaging directly with Montana’s Attorney General to talk about how Alberta can partner on border security measures.
Taking a more defiant approach, Ontario Premier Doug Ford has criticized the tariffs. Taking particular issue with Trump’s view that Canada’s border poses a comparable issue to the Mexican border, Ford has said the tariffs are akin to “a family member stabbing you in the heart” and that Canada would have no choice but to impose retaliatory tariffs if the incoming administration makes good on their proposal. Ford has stated the tariffs are the biggest threat Ontario has ever seen, noting the province will be launching a “stronger together” marketing campaign targeting key U.S. states over the coming months.
Federally, Immigration Minister Marc Miller pushed back on the notion that Canada contributes to illegal immigration, noting that the number of border apprehensions in Canada is negligible compared to those at the U.S. southern border. Deputy Prime Minister Chrystia Freeland underscored the deeply interconnected economic relationship between Canada and the U.S., emphasizing that Canada is the largest market for U.S. goods, surpassing China, Japan, the U.K., and France combined. She reassured Canadians that Prime Minister Trudeau’s emergency meeting with first ministers this week, called for by the latter, aimed to develop a unified “Team Canada” strategy to constructively protect the mutually beneficial trade relationship and address potential tariffs.
Why This Matters
Canada exports over USD 400 billion worth of goods to the U.S. annually, with energy products, motor vehicles and parts, and consumer goods forming most of these exports. The trading relationship between Canada and the United States is valued at nearly USD 960 billion per year, underscoring mutual reliance on each other’s economy, particularly as key sources of imported energy. However, the potential imposition of tariffs by the U.S. could significantly disrupt this deeply integrated supply chain, threaten energy security, and increase the cost of trade for both nations.
In Alberta, the effects would be particularly acute. The province's economy is heavily dependent on energy, which accounts for over 80 per cent of Alberta’s $150 billion in shipments to the U.S. Tariffs on oil and gas would drive up operational costs, threatening production levels and job security in this critical sector. When combined with Canada’s federal emissions cap—which proposes a 35 per cent emissions reduction below 2019 levels—the proposed tariffs could further undermine Alberta’s energy sector by driving up costs, reducing competitiveness, and deterring investments. Together, these pressures would further strain Alberta’s economy, compounding the challenges its industries and workers already face.
For Canada, the implications of these tariffs extend far beyond trade. A weaker Canadian dollar—likely a consequence of the proposed tariffs—could introduce inflationary pressures, reversing recent progress in reducing inflation. This would exacerbate the affordability crisis already burdening Canadians, creating a ripple effect across the economy that would surely prolong the “vibecession” the Federal Government has been struggling against, with the latest attempt being a two-month GST holiday. Similarly, U.S. consumers would face rising costs as goods become more expensive due to the tariffs, reducing their purchasing power and potentially slowing consumer-driven economic growth.
Beyond the direct economic impacts, tariffs could reignite trade tensions and provoke retaliatory actions from affected countries. Canada, Mexico, and China (Trump proposed an extra 10% tariff on Chinese imports, which he suggested would remain in place until China takes substantial action to curb fentanyl smuggling) account for 40% of all U.S. imports, meaning the introduction of tariffs on these nations could lead to a trade war with widespread economic fallout. While pundits continue to debate the seriousness of Trump’s threat, there is a historical precedent: during Trump’s first term, increased U.S. tariffs on Canadian steel and aluminum led Canada to announce billions of dollars in retaliatory duties in 2018. A similar cycle of retaliation would harm all economies involved, with long-term consequences for global trade and economic stability.
Go Deeper
This article from CBS News discusses how Canada might respond if Trump imposes 25 per cent tariffs.
Sovereignty Act in Action: Alberta Pushes Back on Federal Emissions Regulations
Ottawa’s new Emissions Cap proposes a 35 per cent reduction in emissions from Canada’s oil and gas sector below 2019 levels. Many in Alberta view this as synonymous with a production cap and are rightfully concerned about its potentially detrimental impact on the province’s economic future. In response, Premier Danielle Smith has invoked the Alberta Sovereignty Within a United Canada Act (“Sovereignty Act”) to pre-emptively prevent the regulations from being implemented in Alberta.
The Sovereignty Act, a key promise in Smith’s 2022 campaign, theoretically allows Alberta to reject enforcement of federal laws or policies that the provincial legislature deems unconstitutional or harmful to the interests of Alberta, within certain legal boundaries. On Tuesday, the Premier introduced a motion under the act, designating oil and gas facilities as critical infrastructure, mandating that oil companies report emissions directly to the province, and enabling the Alberta Petroleum Marketing Commission to expand its use of royalty-in-kind programs.
This is not the first time the provincial government has invoked the Sovereignty Act in response to federal energy policies. Last December, a similar motion was passed to counter Ottawa’s proposed Clean Electricity Regulations.
Why This Matters
Premier Smith has long promised to introduce a motion under the Sovereignty Act should the federal government choose to press forward with their proposed emissions cap. Not only is the motion introduced this week a significant shot across the bow of the federal government, but there are some very real potential impacts to the energy sector itself.
First and foremost, there is broad agreement both inside and outside of the industry that the proposed emissions cap appears predatory in nature and will likely function as a de facto cap on production – regardless of the messaging from the federal government. The provincial government will see its actions as completely justified given the federal government’s continued efforts to encroach on constitutionally given provincial jurisdiction and the economic impacts of hamstringing Alberta’s largest and most economically important sector; especially relevant given the cost-of-living crisis facing both Albertans and Canadians more broadly.
That being said, the motion and the provincial government’s attempt to wrest more control of the sector from the federal government will put energy companies in a tricky position. While lawyers from both levels of government battle it out in what is expected to be a prolonged legal fight, the sector is left to figure out who is actually in charge. This could mean duplicating reporting efforts to keep both orders of government happy. That’s more red tape and higher costs for an industry obsessed with finding efficiencies, at least while they wait for greater clarity on how the government envisions operationalizing the motion.
Go Deeper
This Op-ed from the Calgary Herald and this article from CBC News describe the expectations from authorizing this act, and the actions that led to this particular motion being enforced.
Question Period - Top Issues
On the Order Paper
Government Bills and Orders
Second Reading
Bill 31 - Justice Statutes Amendment Act, 2024
Bill 33 - Protection of Privacy Act
Bill 34 - Access to Information Act
Bill 35 - All Seasons Resort Act Bill 36 - Miscellaneous Statutes Amendment Act, 2024
Committee of the Whole
Bill 32 – Financial Statutes Amendment Act, 2024 (No. 2) ($)
Third Reading
Bill 26 - Health Statutes Amendment Act, 2024 (No. 2)
Bill 27 - Education Amendment Act, 2024
Bill 29 - Fairness and Safety in Sport Act
Public Bills and Orders Other Than Government Bills and Orders
Second Reading
Bill 208 - Psycho-Educational Assessment Access Act
Bill 209 - Reconciliation Implementation Act
Bill 211 - Arts and Creative Economy Advisory Council Act
Bill 212 - Organ and Tissue Donor Information Agreement Act
Bill 214 - Eastern Slopes Protection Act
Bill 215 - Prohibiting Ownership of Agricultural Lands (Pension Plans and Trust Corporations) Act
Committee of the Whole
Bill 206 - Child and Youth Advocate (Parent and Guardian Advisor) Amendment Act, 2024
Bills Awaiting Royal Assent
Bill 24 - Alberta Bill of Rights Amendment Act, 2024
Bill 25 - Early Learning and Child Care Amendment Act, 2024
Bill 28 - Meat Inspection Amendment Act, 2024
Bill 30 - Service Alberta Statutes Amendment Act, 2024
Schedule of the Legislature
The fall session is expected to sit until December 5, 2024. A full schedule can be found here.