It doesn’t bode well for our country that our economic security rests on tariff exceptions to be negotiated by Liberal politicians who have spent the majority of Trump’s public life calling him a “threat to liberal democracy” and his supporters racists and fascists. Their hostility doesn’t lend itself to fruitful diplomacy. In any event, Trump’s EV rollback and aggressive tariffs will spell disaster for the Canadian EV sector.

What does Donald Trump’s resounding win in the recent U.S. election mean for Canada? Unfortunately, there doesn’t seem to have been much thought about the answer to this question in Ottawa, because the vast majority of our political and pundit class expected his opponent to be victorious. Suddenly they’re all having to process this unwelcome intrusion of reality into their narrow mental picture.

Well, what does it mean?

It is early days, and it will take some time to sift through the various policy commitments of the incoming Trump Administration to unpack the Canadian angle. But one thing we do know is that a Trump presidency will be no friend to the electric vehicle industry.

A Harris administration would have been. But, Trump spent much of his campaign slamming EV subsidies and mandates, pledging at the Republican National Convention in July that he will “end the electric vehicle mandate on day one.”

This line was so effective, especially in must-win Michigan, with its hundreds of thousands of autoworkers, that Kamala Harris was forced to assure everyone who listened that the U.S. has no EV mandate, and that she has no intention of introducing one.

Of course, this wasn’t strictly true.

First, the Biden Administration, of which Harris was a part, issued an Executive Order with the explicit goal of a “50% Electric Vehicle Sales Share” by 2030. The Biden-Harris Administration (to use their own formulation) instructed their Environmental Protection Agency (EPA) to introduce increasingly stringent tailpipe emission regulations on cars and light trucks with an eye towards pushing automakers to manufacture and sell more electric and hybrid vehicles.

Their EPA also issued a waiver which allows California to enact auto emissions regulations that are tougher than the federal government’s, which functions as a kind of back-door EV mandate nationally. After all, auto companies aren’t going to manufacture one set of vehicles for California, the most populous state, and another for the rest of the country.

And as for intentions, though the Harris camp consistently held that her prior policy positions shouldn’t be held against her, it’s hard to forget that as senator she’d co-sponsored the Zero-Emission Vehicles Act, which would have mandated that all new vehicles sold in the U.S. be “zero emission” by 2040. During her failed 2020 presidential campaign, Harris accelerated that proposed timeline, saying that the auto market should be all-electric by 2035.

In other words, she seemed pretty fond of the EV policies which Justin Trudeau and Steven Guilbeault have foisted upon Canada.

For Trump, all of these policies can be filed under “green new scam” climate policies, which stifle American resource development and endanger national prosperity. Now that he’s retaken the White House, it is expected that he will issue his own executive orders to the EPA, rescinding Biden’s tailpipe instructions and scrapping their waiver for California. And though he will be hindered somewhat by Congress, he’s likely to do everything in his power to roll back the EV subsidies contained in the (terribly named) Inflation Reduction Act and lobby for changes limiting which EVs qualify for tax credits, and how much.

All of this will be devastating for the EV industry, which is utterly reliant on the carrots and sticks of subsidies and mandates. And it’s particularly bad news for the Trudeau government (and Doug Ford’s government in Ontario), which have gone all-in on EVs, investing billions of taxpayer dollars to convince automakers to build their EVs and batteries here.

Remember that “vehicles are the second largest Canadian export by value, at $51 billion in 2023 of which 93% was exported to the U.S.,” according to the Canadian Vehicle Manufacturers Association, and “Auto is Ontario’s top export at 28.9% of all exports (2023).”

Canada’s EV subsidies were pitched as an “investment” in an evolving auto market, but that assumes that those pre-existing lines of trade will remain essentially unchanged. If American EV demand collapses, or significantly contracts without mandates or tax incentives, we’ll be up the river without a paddle.

And that will be true, even if the U.S. EV market proves more resilient than I expect it to. That is because of Trump’s commitment to “Making America Great Again” by boosting American manufacturing and the jobs it provides. He campaigned on a blanket tariff of 10 percent on all foreign imports, with no exceptions mentioned. This would have a massive impact on Canada, since the U.S. is our largest trading partner.

Though Justin Trudeau and Chrystia Freeland have been saying to everyone who will listen how excited they are to work with the Trump Administration again, and “Canada will be fine,” it doesn’t bode well for our country that our economic security rests on tariff exceptions to be negotiated by Liberal politicians who have spent the majority of Trump’s public life calling him a “threat to liberal democracy” and his supporters racists and fascists. Their hostility doesn’t lend itself to fruitful diplomacy.

In any event, Trump’s EV rollback and aggressive tariffs will spell disaster for the Canadian EV sector.

The optimism that existed under the Biden administration that Canada could significantly increase its export capacity to the USA is going down the drain. The hope that “Canada could reestablish its export sector as a key driver of growth by positioning itself as a leader in electric vehicle and battery manufacturing, along with other areas in cleantech,” in the words of an RBC report, is swiftly fading. It seems more likely now that Canada will be left holding the bag on a dying industry in which we’re invested heavily.

The Trudeau Liberals’ aggressive push, driven by ideology and not market forces, to force Electric Vehicles on everyone is already backfiring on the Canadian taxpayer. Pierre Poilievre must take note — EV mandates and subsidies are bad for our country, and as Trump has demonstrated, they’re not a winning policy. He should act accordingly.

From Canadians for Affordable Energy

Even if it fails to hit its emissions targets (which it will,) the economic consequences of enacting this plan are very serious. It would make Canada the only country in the world which willingly and purposefully stifles its single largest revenue stream. 

At this point, everyone in Canada has heard about the Carbon Tax and had a chance to experience its negative effects. But less has been said about another harmful policy dreamed up by the Trudeau government — the Emissions Cap on the oil and gas sector. Just like the Carbon Tax, the Emissions Cap is part of Trudeau’s larger program to try and achieve “Net Zero” greenhouse gas (GHG) emissions by 2050, which will have no positive impact on the environment, but which will be ruinous to Canada’s natural resource sector and to the national economy.

In their 2021 platform, the Liberals made a commitment to “cap and cut emissions from the oil and gas sector” and proclaimed that that industry must reduce emissions “at a pace and scale needed to achieve net-zero by 2050.” As promised, in December 2023 the Trudeau government proposed an Emissions Cap to reduce GHG emissions in the oil and gas sector by 42 percent by 2030. Keep in mind Canada contributes only 1.5% of global emissions, so this plan, even if accomplished, would reduce global emissions by less than one half of one percent.

Even if it fails to hit its emissions targets (which it will,) the economic consequences of enacting this plan are very serious. It would make Canada the only country in the world which willingly and purposefully stifles its single largest revenue stream. After all, the oil and gas industry generates $45 billion per year in annual economic activity, and contributes $170 billion per year to the GDP.

But don’t take my word for it. According to a Deloitte report commissioned by the Government of Alberta, an Emissions Cap would lead to a 10% decrease in Alberta’s oil production and a 16% decrease in conventional natural gas production. Fossil fuel production would decrease in B.C., Saskatchewan, and Newfoundland as well. Other industries connected to the oil and gas sector such as the mining, refinery products, and utilities are also expected to be impacted and will experience a decrease in output in Alberta and the rest of Canada.

The report goes on to state that in 2040 “Alberta’s GDP is estimated to be lower by 4.5% and Canada’s GDP by 1.0% compared to the baseline.”

It notes that because it is assumed that “the Cap is a permanent measure, the shift in the output of the oil and gas sector and associated losses are permanent and accumulate over time. Cumulatively, over the 2030 to 2040 period, we estimate that real GDP in Alberta is $191 billion lower and real GDP in the Rest of Canada is $91 billion lower, compared to the baseline scenario ($2017 dollars).”

Of course, the environmentalists will crow that the oil and gas industry is dying anyway and the demand for oil and gas around the world is slowly decreasing, but this is simply not true.

Global demand for oil and gas is only growing and will continue to do so. According to the report, “Based on current policy and before the impact of the Cap, we expect: Oil production in Canada to increase by 27% by 2030 and 32% by 2040 from 2021 levels; and Gas production in Canada to increase by 10% by 2030 and 16% by 2040 from 2021 levels.”

And this isn’t the only study which projects negative outcomes from this policy. The Montreal Economic Institute (MEI) released a study which describes how the Trudeau government’s proposed Emissions Cap for the energy sector would “cost the Canadian economy between $44.8 billion and $79.3 billion a year” and would “cause substantial losses, without achieving any net reduction in global emission.”

You can read the study here.

Plus it is worth noting that this emissions cap will result in “substantial losses without achieving any net reduction in global emissions.”

Why? Because of the increase in global demands for oil and gas, we can either produce those resources here or get them from another country that has no environmental, much less labour standards, such as Russia, Venezuela, and Iran.

To add insult to injury for the oil and gas producing provinces, and as I’ve pointed out in the past, this cap on emissions would apply only to the oil and gas sector. This emissions cap would not apply to the concrete industry, the automotive industry, or the mining industry. And — surprise surprise — it certainly won’t apply to Montreal’s lucrative jet-building industry.

But take heed: this isn’t simply an Alberta issue. This is a Canadian issue and one that everyone in Canada should be concerned about.

The umbrella of Net Zero by 2050 is large and far reaching, and an emissions cap is simply one part of a multi-layered attack on our economy and way of life. Carbon taxes, layered on top of a Clean Fuel Standard, layered on top of pipeline blockages, layered on top of Bills C-48 and C-69, preventing oil from being shipped from other parts of the world — will run counter to our national interests, and endanger the Canadian way of life for generations to come.

If Canadians are now vehemently opposed to carbon taxes, as we suggested would be the case half a dozen years ago, wait for this unnecessary burden to befall them.

In the words made famous by the Canadian rock legend BTO, “You ain’t seen nothing yet!”

Dan McTeague is President of Canadians for Affordable Energy.