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U.S. tariffs, Alberta’s frustration and equalization disputes could lead to a stronger, more united country
Worried about American tariffs or Albertans pushing for separation? There’s good news: the eventual result could be a stronger, more united and more prosperous Canada.
Moves by United States President Donald Trump to make America great again might make Canada greater, too, eventually. For sure, there is pain in the meantime. Free trade with the U.S. has clear benefits that businesses and consumers alike have become accustomed to. However, in 2018, Trump imposed tariffs on Canadian steel and aluminium, triggering a trade dispute. Tariffs have again compromised this arrangement, causing economic pain to businesses and consumers alike.
On the upside, these challenges are forcing long-overdue changes in Canada. Ottawa is dedicating more resources to fight the opioid crisis, secure our borders and address transnational crime. Rebuilding our military also seems forthcoming, after years of neglect. For example, Ottawa’s commitment to increased NATO contributions and defence spending came directly after U.S. pressure to boost military readiness. These changes should not have required pressure from Trump, but they did.
Even better, Canada’s underachieving ways have become less acceptable. With free trade with the U.S. in jeopardy, Canadians are asking why there isn’t free trade between provinces or more pipelines to bring oil and natural gas to tidewater. Better late than never.
A study by University of Regina environmental sociology professor James Warren found that if the Trans Mountain, Northern Gateway and Energy East pipelines had been running at full capacity from 2015 to 2022, Canada would have seen $292 billion in additional export revenues—a staggering loss.
Canada finally seems ready to seize these opportunities. A Nanos Research poll found that six in 10 Quebecers would support the Energy East pipeline, which would bring Alberta oil to eastern refineries and Atlantic tankers. Seventy-seven per cent would support federal funding for pipeline construction, and only 15 per cent are opposed.
That’s good news for Alberta, but bad federal policies still leave the province miffed. Premier Danielle Smith recently made significant demands, saying that whichever prime minister forms government on April 28 has six months to respond, or Albertans will vote on independence.
Smith wants full access to oil and gas corridors; an end to Bill C-69; tankers allowed off the B.C. coast; no oil and gas emissions cap; no Clean Electricity Regulations; the return of single-use plastics; an end to the net-zero car mandate; industrial carbon taxation left to the provinces; and an end to censorship on energy companies. These changes would unleash Alberta’s economy and strengthen the entire country’s energy independence and fiscal health.
The premier said Albertans were done “subsidizing other provinces that are fully capable of funding themselves.” Although neither the Conservatives nor the Liberals are eager to change equalization, they may have to.
Equalization aims to ensure comparable services across provinces, but political considerations have left it bloated and distorted. The formula penalizes provinces rich in oil and gas while disregarding other revenue sources. Quebec receives $13 billion annually, facilitating its ban on fracking and leaving its shale gas in the ground.
Equalization discourages tax reductions, growth policies and resource development in recipient provinces. In 2025-26, every province but B.C., Alberta and Saskatchewan will be recipients. Trump’s 51st state talk, combined with Western frustration with Ottawa, may finally push for reform, ultimately benefiting Canadian unity and the country’s GDP.
The standoffs between the U.S. and Canada, and Alberta and Ottawa, are like those between unions and employers. Tension between competing interests eventually leads to resolution. Canada is ripe for renewal.
Lee Harding is a research fellow for the Frontier Centre for Public Policy.
