Carney Says Canada Can Use Electricity for Leverage If US Starts Trade War #CanadaFinance

(Bloomberg) — Mark Carney, the former central banker who’s running to lead Canada, said the government should be open to curbing electricity exports to the US if it needs to retaliate against tariffs from the Trump administration.

Most Read from Bloomberg

“It’s not the first card” to play in a trade war, Carney said during an interview with Radio-Canada, the French-language public broadcaster. But any negotiation with the US will be “very tough,” he said, suggesting the Canadian government needs to keep its options open.

The provinces of Quebec and Ontario are important exporters of electricity, sending power south to states including New York. The western provinces of Alberta and Saskatchewan are huge suppliers of oil, gas and uranium to US refineries and utilities.

Restricting the flow of energy to the US is one measure being discussed in Canada in the event of a trade war, but it’s controversial. The premiers of Alberta and Saskatchewan have said they’re against moves to curb energy sales to the US, which are the primary source of the US’s trade deficit with Canada.

Canada produces more than half of the crude oil that’s imported by the US — some 4 million barrels a day. Excluding energy, the US has a trade surplus with Canada, according to US government data.

US President Donald Trump has threatened to put 25% tariffs on goods the US buys from Canada, perhaps as early as Feb. 1. That would hurt the Canadian economy at a time when the national government is in the midst of a leadership change.

Members of the governing Liberal Party will select a new leader on Mar. 9 to replace Prime Minister Justin Trudeau. Carney and former Finance Minister Chrystia Freeland are the biggest names in the race, and both have called for strong retaliation if Trump imposes tariffs.

In the Radio-Canada interview, Carney promised to bring back balanced budgets, but said he would allow the government to run small deficits occasionally to boost the economy and the private sector.

“The government spends too much, but doesn’t invest enough,” he said, adding that he would reduce expenses and seek to find efficiencies in the public sector.

Freeland, who earned Trump’s ire as the leader of the Canadian side during the North American trade negotiations in 2017 and 2018, said in an interview on Radio-Canada talk show Tout le monde en parle that Trump is a “bully.”

Story Continues