Alberta
Ford and Trudeau are playing checkers. Trump and Smith are playing chess
By Dan McTeague
Ford’s calls for national unity – “We need to stand united as Canadians!” – in context feels like an endorsement of fellow Electric Vehicle fanatic Trudeau. And you do wonder if that issue has something to do with it. After all, the two have worked together to pump billions in taxpayer dollars into the EV industry.
There’s no doubt about it: Donald Trump’s threat of a blanket 25% tariff on Canadian goods (to be established if the Canadian government fails to take sufficient action to combat drug trafficking and illegal crossings over our southern border) would be catastrophic for our nation’s economy. More than $3 billion in goods move between the U.S. and Canada on a daily basis. If enacted, the Trump tariff would likely result in a full-blown recession.
It falls upon Canada’s leaders to prevent that from happening. That’s why Justin Trudeau flew to Florida two weeks ago to point out to the president-elect that the trade relationship between our countries is mutually beneficial.
This is true, but Trudeau isn’t the best person to make that case to Trump, since he has been trashing the once and future president, and his supporters, both in public and private, for years. He did so again at an appearance just the other day, in which he implied that American voters were sexist for once again failing to elect the nation’s first female president, and said that Trump’s election amounted to an assault on women’s rights.
Consequently, the meeting with Trump didn’t go well.
But Trudeau isn’t Canada’s only politician, and in recent days we’ve seen some contrasting approaches to this serious matter from our provincial leaders.
First up was Doug Ford, who followed up a phone call with Trudeau earlier this week by saying that Canadians have to prepare for a trade war. “Folks, this is coming, it’s not ‘if,’ it is — it’s coming… and we need to be prepared.”
Ford said that he’s working with Liberal Finance Minister Chrystia Freeland to put together a retaliatory tariff list. Spokesmen for his government floated the idea of banning the LCBO from buying American alcohol, and restricting the export of critical minerals needed for electric vehicle batteries (I’m sure Trump is terrified about that last one).
But Ford’s most dramatic threat was his announcement that Ontario is prepared to shut down energy exports to the U.S., specifically to Michigan, New York, Wisconsin, and Minnesota, if Trump follows through with his plan. “We’re sending a message to the U.S. You come and attack Ontario, you attack the livelihoods of Ontario and Canadians, we’re going to use every tool in our toolbox to defend Ontarians and Canadians across the border,” Ford said.
Now, unfortunately, all of this chest-thumping rings hollow. Ontario does almost $500 billion per year in trade with the U.S., and the province’s supply chains are highly integrated with America’s. The idea of just cutting off the power, as if you could just flip a switch, is actually impossible. It’s a bluff, and Trump has already called him on it. When told about Ford’s threat by a reporter this week, Trump replied “That’s okay if he does that. That’s fine.”
And Ford’s calls for national unity – “We need to stand united as Canadians!” – in context feels like an endorsement of fellow Electric Vehicle fanatic Trudeau. And you do wonder if that issue has something to do with it. After all, the two have worked together to pump billions in taxpayer dollars into the EV industry. Just over the past year Ford and Trudeau have been seen side by side announcing their $5 billion commitment to Honda, or their $28.2 billion in subsidies for new Stellantis and Volkswagen electric vehicle battery plants.
Their assumption was that the U.S. would be a major market for Canadian EVs. 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).”
But Trump ran on abolishing the Biden administration’s de facto EV mandate. Now that he’s back in the White House, the market for those EVs that Trudeau and Ford invested in so heavily is going to be much softer. Perhaps they’d like to be able to blame Trump’s tariffs for the coming downturn rather than their own misjudgment.
In any event, Ford’s tactic stands in stark contrast to the response from Alberta, Canada’s true energy superpower. Premier Danielle Smith made it clear that her province “will not support cutting off our Alberta energy exports to the U.S., nor will we support a tariff war with our largest trading partner and closest ally.”
Smith spoke about this topic at length at an event announcing a new $29-million border patrol team charged with combatting drug trafficking, at which said that Trudeau’s criticisms of the president-elect were, “not helpful.” Her deputy premier Mike Ellis was quoted as saying, “The concerns that president-elect Trump has expressed regarding fentanyl are, quite frankly, the same concerns that I and the premier have had.” Smith and Ellis also criticized Ottawa’s progressively lenient approach to drug crimes.
(For what it’s worth, a recent Léger poll found that “Just 29 per cent of [Canadians] believe Trump’s concerns about illegal immigration and drug trafficking from Canada to the U.S. are unwarranted.” Perhaps that’s why some recent polls have found that Trudeau is currently less popular in Canada than Trump at the moment.)
Smith said that Trudeau’s criticisms of the president-elect were, “not helpful.” And on X/Twitter she said, “Now is the time to… reach out to our friends and allies in the U.S. to remind them just how much Americans and Canadians mutually benefit from our trade relationship – and what we can do to grow that partnership further,” adding, “Tariffs just hurt Americans and Canadians on both sides of the border. Let’s make sure they don’t happen.”
This is exactly the right approach. Smith knows there is a lot at stake in this fight, and is not willing to step into the ring in a fight that Canada simply can’t win, and will cause a great deal of hardship for all involved along the way.
While Trudeau indulges in virtue signaling and Ford in sabre rattling, Danielle Smith is engaging in true statesmanship. That’s something that is in short supply in our country these days.
As I’ve written before, Trump is playing chess while Justin Trudeau and Doug Ford are playing checkers. They should take note of Smith’s strategy. Honey will attract more than vinegar, and if the long history of our two countries tell us anything, it’s that diplomacy is more effective than idle threats.
Dan McTeague is President of Canadians for Affordable Energy.
From the Fraser Institute
By Jason Clemens and Elmira Aliakbari
The challenge of GHG emissions in 2050 is not in the industrial world but rather in the developing world, where there is still significant basic energy consumption using timber and biomass.
The new Memorandum of Understanding (MOU) between the federal and Alberta governments lays the groundwork for substantial energy projects and infrastructure development over the next two-and-a-half decades. It is by all accounts a step forward, though, there’s debate about how large and meaningful that step actually is. There is, however, a fundamental flaw in the foundation of the agreement: it’s commitment to net zero in Canada by 2050.
The first point of agreement in the MOU on the first page of text states: “Canada and Alberta remain committed to achieving net zero greenhouse gas emissions by 2050.” In practice, it’s incredibly difficult to offset emissions with tree planting or other projects that reduce “net” emissions, so the effect of committing to “net zero” by 2050 means that both governments agree that Canada should produce very close to zero actual greenhouse gas (GHG) emissions. Consider the massive changes in energy production, home heating, transportation and agriculture that would be needed to achieve this goal.
So, what’s wrong with Canada’s net zero 2050 and the larger United Nations’ global goal for the same?
Let’s first understand the global context of GHG reductions based on a recent study by internationally-recognized scholar Vaclav Smil. Two key insights from the study. First, despite trillions being spent plus international agreements and regulatory measures starting back in 1997 with the original Kyoto agreement, global fossil fuel consumption between then and 2023 increased by 55 per cent.
Second, fossil fuels as a share of total global energy declined from 86 per cent in 1997 to 82 per cent in 2022, again, despite trillions of dollars in spending plus regulatory requirements to force a transition away from fossil fuels to zero emission energies. The idea that globally we can achieve zero emissions over the next two-and-a-half decades is pure fantasy. Even if there is an historic technological breakthrough, it will take decades to actually transition to a new energy source(s).
Let’s now understand the Canada-specific context. A recent study examined all the measures introduced over the last decade as part of the national plan to reduce emissions to achieve net zero by 2050. The study concluded that significant economic costs would be imposed on Canadians by these measures: inflation-adjusted GDP would be 7 per cent lower, income per worker would be more than $8,000 lower and approximately 250,000 jobs would be lost. Moreover, these costs would not get Canada to net zero. The study concluded that only 70 per cent of the net zero emissions goal would be achieved despite these significant costs, which means even greater costs would be imposed on Canadians to fully achieve net zero.
It’s important to return to a global picture to fully understand why net zero makes no sense for Canada within a worldwide context. Using projections from the International Energy Agency (IEA) in its latest World Energy Outlook, the current expectation is that in 2050, advanced countries including Canada and the other G7 countries will represent less than 25 per cent of global emissions. The developing world, which includes China, India, the entirety of Africa and much of South America, is estimated to represent at least 70 per cent of global emissions in 2050.
Simply put, the challenge of GHG emissions in 2050 is not in the industrial world but rather in the developing world, where there is still significant basic energy consumption using timber and biomass. A globally-coordinated effort, which is really what the U.N. should be doing rather than fantasizing about net zero, would see industrial countries like Canada that are capable of increasing their energy production exporting more to these developing countries so that high-emitting energy sources are replaced by lower-emitting energy sources. This would actually reduce global GHGs while simultaneously stimulating economic growth.
Consider a recent study that calculated the implications of doubling natural gas production in Canada and exporting it to China to replace coal-fired power. The conclusion was that there would be a massive reduction in global GHGs equivalent to almost 90 per cent of Canada’s total annual emissions. In these types of substitution arrangements, the GHGs would increase in energy-producing countries like Canada but global GHGs would be reduced, which is the ultimate goal of not only the U.N. but also the Carney and Smith governments as per the MOU.
Finally, the agreement ignores a basic law of economics. The first lesson in the very first class of any economics program is that resources are limited. At any given point in time, we only have so much labour, raw materials, time, etc. In other words, when we choose to do one project, the real cost is foregoing the other projects that could have been undertaken. Economics is mostly about trying to understand how to maximize the use of limited resources.
The MOU requires massive, literally hundreds of billions of dollars to be used to create nuclear power, other zero-emitting power sources and transmission systems all in the name of being able to produce low or even zero-emitting oil and gas while also moving to towards net zero.
These resources cannot be used for other purposes and it’s impossible to imagine what alternative companies or industries would have been invested in. What we do know is that workers, entrepreneurs, businessowners and investors are not making these decisions. Rather, politicians and bureaucrats in Ottawa and Edmonton are making these decisions but they won’t pay any price if they’re wrong. Canadians pay the price. Just consider the financial fiasco unfolding now with Ottawa, Ontario and Quebec’s subsidies (i.e. corporate welfare) for electric vehicle batteries.
Understanding the fundamentally flawed commitment to Canadian net zero rather than understanding a larger global context of GHG emissions lays at the heart of the recent MOU and unfortunately for Canadians will continue to guide flawed and expensive policies. Until we get the net zero policies right, we’re going to continue to spend enormous resources on projects with limited returns, costing all Canadians.
Jason Clemens
Executive Vice President, Fraser Institute
Elmira Aliakbari
This article supplied by Troy Media.
Alberta is banking on oil to erase rising deficits, but the province’s budget can’t hold without major fiscal changes
Alberta is heading for a fiscal cliff, and no amount of oil revenue will save it this time.
The province is facing ballooning deficits, rising debt and an addiction to resource revenues that rise and fall with global markets. As Budget 2026 consultations begin, the government is gambling on oil prices to balance the books again. That gamble is failing. Alberta is already staring down multibillion-dollar shortfalls.
I estimate the province will run deficits of $7.7 billion in 2025-26, $8.8 billion in 2026-27 and $7.5 billion in 2027-28. If nothing changes, debt will climb from $85.2 billion to $112.3 billion in just three years. That is an increase of more than $27 billion, and it is entirely avoidable.
These numbers come from my latest fiscal analysis, completed at the end of October. I used conservative assumptions: oil prices at US$62 to US$67 per barrel over the next three years. Expenses are expected to keep growing faster than inflation and population. I also requested Alberta’s five-year internal fiscal projections through access to information but Treasury Board and Finance refused to release them. Those forecasts exist, but Albertans have not been allowed to see them.
Alberta has been running structural deficits for years, even during boom times. That is because it spends more than it brings in, counting on oil royalties to fill the gap. No other province leans this hard on non-renewable resource revenue. It is volatile. It is risky. And it is getting worse.
That is what makes Premier Danielle Smith’s recent Financial Post column so striking. She effectively admitted that any path to a balanced budget depends on doubling Alberta’s oil production by 2035. That is not a plan. It is a fantasy. It relies on global markets, pipeline expansions and long-term forecasts that rarely hold. It puts taxpayers on the hook for a commodity cycle the province does not control.
I have long supported Alberta’s oil and gas industry. But I will call out any government that leans on inflated projections to justify bad fiscal choices.
Just three years ago, Alberta needed oil at US$70 to balance the budget. Now it needs US$74 in 2025-26, US$76.35 in 2026-27 and US$77.50 in 2027-28. That bar keeps rising. A single US$1 drop in the oil price will soon cost Alberta $750 million a year. By the end of the decade, that figure could reach $1 billion. That is not a cushion. It is a cliff edge.
Even if the government had pulled in $13 billion per year in oil revenue over the last four years, it still would have run deficits. The real problem is spending. Since 2021, operating spending, excluding COVID-19 relief, has jumped by $15.5 billion, or 31 per cent. That is nearly eight per cent per year. For comparison, during the last four years under premiers Ed Stelmach and Alison Redford, spending went up 6.9 per cent annually.
This is not a revenue problem. It is a spending problem, papered over with oil booms. Pretending Alberta can keep expanding health care, education and social services on the back of unpredictable oil money is reckless. Do we really want our schools and hospitals held hostage to oil prices and OPEC?
The solution was laid out decades ago. Oil royalties should be saved off the top, not dumped into general revenue. That is what Premier Peter Lougheed understood when he created the Alberta Heritage Savings Trust Fund in 1976. It is what Premier Ralph Klein did when he cut spending and paid down debt in the 1990s. Alberta used to treat oil as a bonus. Now it treats it as a crutch.
With debt climbing and deficits baked in, Alberta is out of time. I have previously laid out detailed solutions. But here is where the government should start.
First, transparency. Albertans deserve a full three-year fiscal update by the end of November. That includes real numbers on revenue, expenses, debt and deficits. The government must also reinstate the legal requirement for a mid-year economic and fiscal report. No more hiding the ball.
Second, a real plan. Not projections based on hope, but a balanced three-year budget that can survive oil prices dropping below forecast. That plan should be part of Budget 2026 consultations.
Third, long-term discipline. Alberta needs a fiscal sustainability framework, backed by a public long-term report released before year-end.
Because if this government will not take responsibility, the next oil shock will.
Lennie Kaplan is a former senior manager in the fiscal and economic policy division of Alberta’s Ministry of Treasury Board and Finance, where, among other duties, he examined best practices in fiscal frameworks, program reviews and savings strategies for non-renewable resource revenues. In 2012, he won a Corporate Values Award in TB&F for his work on Alberta’s fiscal framework review. In 2019, Mr. Kaplan served as executive director to the MacKinnon Panel on Alberta’s finances—a government-appointed panel tasked with reviewing Alberta’s spending and recommending reforms.
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