Tariffs a wake-up call for how much of our natural resources are tapped by the U.S.

The Canadian public is souring on the U.S. as Trump wields trade threats as an “economic force” to drive home his message that Canada should become the 51st state. 

The prospect has sparked a Buy Canadian movement, and a national Leger poll conducted last weekend suggests 80 per cent of Canadians are opposed to U.S. companies taking greater ownership of natural resource projects in Canada. 

Opposition was highest in British Columbia and Quebec at 83 per cent opposed and lowest in Alberta and Ontario sitting at 78 and 78 per cent respectively. 

However, it may be difficult to unscramble the omelette. U.S. foreign investment in resource sectors like Canada’s fossil fuel industry is entrenched. Nearly 37 per cent of Canada’s oil and gas assets are under foreign control with American investment controlling the lion’s share at 16 per cent, followed closely by Asia with 15 per cent and the European Union at five per cent in 2022, according to Statistics Canada.

Climate groups, like Dogwood, which commissioned the survey, are highlighting connections between White House-tied U.S. oil and gas interests and B.C.’s proposed Ksi Lisims LNG project and Prince Rupert Gas Transmission pipeline project (PRGT). 

Owned by Texas-based Western LNG, Ksi Lisims is getting financial backing from Blackstone Inc. and Apollo Global Management, two Wall Street private equity firms allied with Trump. The liquefied natural gas processing plant and marine terminal on Pearse Island on the northwest coast expects a decision on its environmental assessment soon. 

Blackstone is also the lead investor on the associated Prince Rupert Gas Transmission (PRGT) pipeline project, which would supply natural gas to the Ksi Lisims terminal. The Nisga’a Nation, however, also owns part of the PRGT.

In a purported effort to buffer U.S. tariff impacts and diversify trade, Eby announced last week the province is fast-tracking an “initial” mix of 18 energy, mining and fossil fuel projects that have business cases but still need government permits or approval. 

In the Dogwood Leger poll, 53 per cent of Canadians opposed fast-tacking the PRGT pipeline with investors friendly to Trump while 21 per cent supported the idea. In B.C., that opposition rose to 62 per cent while 22 per cent backed speeding the pipeline project. 

Neither Eby’s office, nor the Ministry of Energy and Climate Solutions headed by Adrian Dix replied to Canada’s National Observer about whether the province will also fast-track Ksi Lisims, or the PRGT, as a response to Trump’s trade threats. 

Additionally, neither office revealed whether they share any concerns with the public about U.S. companies owning mining, LNG or energy exports. 

Trump’s unabashed support for oil and gas and his explicit interest in the resources of his northern neighbour threaten Canadian sovereignty and have profound “planetary implications” as global warming rapidly advances, said John Young, LNG senior strategist at Climate Action Network Canada.

His first day in office, Trump signed a raft of orders aimed at “unleashing” fossil fuels, like lifting former president Joe Biden’s pause on new U.S. LNG export projects, which are anticipated to aggravate the worldwide glut of natural gas and drive down prices before B.C.’s projects even come online, Young noted. 

Given the increasing threats of stranded assets and locking public infrastructure and investment into electrifying LNG, B.C. should deny any further LNG projects, regardless of who owns them, Young said. 

“LNG was the wrong choice before President Trump, and it’s really the wrong choice given the daily threats to our sovereignty,” he said. 

Weaponizing interdependence

Trump’s tactics are ratcheting up public and political sentiment to respond forcefully to tariff threats and leverage the trade interdependence between the U.S. and Canada to potentially weaponize oil and gas, critical minerals pressure points in the trade skirmish.

Eighty-two per cent of Canadians support imposing export taxes on oil headed south of the border as a response to U.S. tariffs, according to another recent poll by Nanos Research Group conducted for Bloomberg News.

B.C. Premier David Eby has repeatedly stressed that provincial mining giant Teck Resources and Rio Tinto’s aluminum smelter based in Kitimat are diverting their critical minerals and metals to other markets. 

Before Trump put a pause on widespread tariffs last week, B.C.’s government departments and Crown corporations were advised to avoid contracts with U.S. companies in the procurement process for major projects. 

Canada or the provinces could also kibosh LNG, or other American owned resource projects, in response to tariffs, but there would be consequences, especially with Trump’s zero-sum approach to international relations and trade, experts say. 

“The risk of escalating retaliation — tit for tat — is real and Canada does not have great options,” said Joshua Karton, a law professor at Queen’s University specializing in international arbitration. 

Provincially, Minister Dix and Environment Minister Tamara Davidson could reject the Ksi Lisims project if they feel it's not sustainable, aligned with First Nations reconciliation, or in the public interest even if the Environmental Assessment Office (EAO) recommends granting a certificate, said Gavin Smith, staff lawyer with West Coast Environmental Law. 

Ministers aren’t required to follow recommendations, but they almost always do, Smith noted. 

However, the federal government may also have a say on a resource project if adverse effects fall within federal jurisdiction, such as harm to endangered species, human health impacts due to pollution of land or waters, or impacts to Indigenous rights. 

When project decisions don’t go their way, companies, or others directly impacted like First Nations, can request judicial reviews, but the outcomes vary with each case, Smith said. 

Under the Canada-U.S.-Mexico Agreement (CUSMA), companies and investors from the U.S. and Mexico have the same rights granted to those from Canada, said Tom Gunton, professor for the resource and environmental planning program at Simon Fraser University. 

There have been past cases where Canada has been successfully sued under these types of provisions, Gunton noted. 

Curiously, Trump weakened the position of U.S. companies with CUSMA by eliminating the investor state arbitration mechanism that was part of the former North American Free Trade Agreement (NAFTA), said Karton. 

The measure allowed foreign investors involved in tussles with host states to seek settlement through a binding third-party arbitration process, but Trump and Robert Lighthizer, who led USMCA negotiations during the president’s first term, felt the mechanism undermined U.S. sovereignty and it was phased out in 2023 under the new agreement. 

“There was just a lot of hostility to the idea that a company can haul a government into a private process where unelected arbitrators … have the power to tell a government whether their policies are legitimate,” Karton said. 

The arbitration process can still take place between Canada and Mexico but American companies dissatisfied with federal or provincial decisions now must argue their cases in Canadian courts, Karton said.

“It’s ironic, because American investors were the biggest beneficiaries of NAFTA arbitrations,” he added. 

Since Trump has effectively torn up CUSMA by instigating his recent steel and aluminum tariffs, if Canada took the case to the World Trade Organization, the “remedy” is the right to take retaliatory measures like counter tariffs, Karton added. 

The U.S. president is notoriously disdainful of international agencies, so it is doubtful he would turn to the WTO if Canada blocked a U.S. project, Karton said.

Canada and the provinces, regardless of what countermeasures they take, still face a steep challenge in shifting their export markets and the serious risk of further retaliation by Trump, Karton said, 

“Trump has made pretty clear that he's serious about using coercive tools available to the United States to try to push Canada into being annexed,” Karton said. 

“It's not just that most of our exports currently go to the United States; it's also that exporting to anywhere else is substantially more expensive.” 

With files from The Canadian Press