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Speaker
Jonathan Wilkinson
Minister of Energy and Natural Resources, Canada
Moderator
David L. Goldwyn
Nonresident Senior Fellow and Chairman, Energy Advisory Group, Global Energy Center, Atlantic Council
Event transcript
Uncorrected transcript: Check against delivery
DAVID L. GOLDWYN: Good afternoon, everyone, and welcome. I’m David Goldwyn. I’m chairman of the Atlantic Council’s Energy Advisory Group and a nonresident senior fellow here at the Atlantic Council. Thanks for joining us in person and also virtually. We’re honored today to be joined by Jonathan Wilkinson, minister of energy and natural resources of Canada, NRCan in the Canadian parlance, to talk about tariffs and energy.
You all may have seen the extreme market reaction to President Trump’s threat to impose 25 percent tariffs on Canada and Mexico and 10 percent on energy trade. And that’s because the US and Canada have probably one of the most integrated energy systems in the world. In 2023 I think we did about 198 billion [dollars] in trade. It’s two-way trade. We get 60 percent of our imported oil from Canada, heavy oil which refineries the Midwest and the Gulf Coast use and which the United States doesn’t make. We have two-way trade in electricity. Almost thirty states, I think, get electricity from Canada. We send gas and oil and products to Canada. They send it back to us. We get a quarter of our uranium from Canada for our nuclear reactors. I think we’ve got seventy pipelines across the border and maybe thirty electricity interconnections.
So that’s why it got a pretty big reaction. We are really closely, closely integrated. And the electricity grid is also really important. We get most of our major components, such as transformers and switch gear, from Canada, as well as critical minerals. So that’s why we had a big reaction. And we’re really, really fortunate to have Minister Wilkinson here to talk to us about what happens next. As you saw in the news, there’s a thirty-day pause, at least thirty days, until tariffs are reimposed, when conversations will take place between our countries. So the timing couldn’t be better. And we’re going to hear from the minister, we’re going to have a little conversation about some of the issues, and go from there.
We couldn’t have a better or more qualified person. Minister Wilkinson knows of what he speaks when it comes to energy. In addition to being the minister, and formerly a minister for climate change and environment and also for oceans, he comes from the tech world. He was chief executive officer of QuestAir Technologies and also the former BioteQ. So he knows—he knows waste to heat. He was a senior vice president with Nexterra—not Next Era, but Nexterra—the waste to heat company. And he’s a pretty smart guy too. He’s a Rhodes Scholar. So he knows this field well and he’s going to be one of the point people for talking to the US government about energy. So, Minister Wilkinson, please join us here on the stage and let’s go from here.
JONATHAN WILKINSON: Thank you. Thank you very much. And, certainly, thanks to the folks here for the invitation to be with you today, and for the flexibility. I was coming from Canada’s west coast, and that’s always a dangerous thing in the winter. It took a little longer to get here than I had anticipated. So I certainly appreciate the flexibility around the timing.
It is, as I say, a pleasure to be with you today, and certainly after what have been some tumultuous and challenging days. But I would like to focus today on the enormous economic opportunities that exist for cooperation between our respective countries. I firmly believe that collaboration is what makes this continent great. And it is what will enable our conversation to move from one about tariffs, which in my mind is a lose-lose conversation, to one about prosperity and security, which offers a win-win.
We have all, I’m sure, heard many times the adage that Canada and the United States are each other’s best friend, closest ally, and most important economic partner. And beyond friendship and our economic partnership, we have long been steadfast partners on the world stage. That is ever more important right now, given the increasingly aggressive behavior of international actors like China.
Though it may feel a little bit cliché to say those words, these statements are undeniably true, despite the difficult moment we have found ourselves in over the past few days. The administration has made clear the concerns regarding border issues, particularly illegal migration and fentanyl. I think it needs to be recognized that the scale of these issues at the Canada-US border are not particularly significant. Fentanyl from Canada represents 0.2 percent of US seizures of fentanyl at the border. And, in fact, last year American border enforcement seized just forty-three pounds of fentanyl from the Canada-US border; not a lot more than the seizures that go the other way. And while illegal migration is very low, we agree that one illegal migrant is too many. That is why we have already been cracking down with 600 percent more investigations in 2024.
I want to be very clear about this. Just like the US, Canada has no interest in illegal crossings, either of people or of substances. One illegal crossing and one pound of fentanyl crossing the border is too much. In this regard, we agree very much with President Trump. That is why, further to conversations we have been having with the administration, Canada recently announced an enhanced border plan, which included an additional investment of over a billion dollars, which will be made in areas like the deployment of additional helicopters, drones, mobile surveillance towers and officers with new K-9 teams to strengthen the border.
And yesterday, after conversations with the president, we announced additional measures. Canada will be appointing a fentanyl czar and will list cartels as terrorists. Together we will launch a Canada-US joint strike force to combat organized crime, fentanyl, and money laundering, ensuring 7/24 eyes will remain on the border. And Prime Minister Trudeau also signed a new intelligence directive on organized crime and fentanyl, which was backed with an additional $200 million.
Canada has acted on these issues, and Canada remains very open to conversations about how we can jointly do more. Productive, collaborative discussions like these are a much better route than destructive economic action that drives up prices for Americans and for Canadians.
With respect to our economic partnership, the Canada-US relationship has long been the envy of the world, keeping our supply chains secure, creating good jobs, and ensuring good prices. Our respective economies are so integrated that I would say the partnership is effectively hardwired. Nearly $2.7 billion worth of goods and services crossed the border each day in 2023. Thirty-six US states rely on Canada as their number one export market. Canadian consumers and businesses purchase more goods from the United States than China, Japan and Germany combined.
This is true in the case of many sectors; for example, the auto sector, where parts will often go back and forth across the border six, seven, eight times before a product is completed. But there is no area where the integrated nature of our economies is clearer than in energy and key resources, such as critical minerals.
For example, Canada supplies significant quantities of low-cost hydroelectricity to several US states via fixed transmission lines. Canadian electricity powers the equivalent of six million American homes. That’s more than every home in the state of Ohio. Canada and the US have an integrated oil pipeline system that supplies Americans approximately four million barrels per day, creating jobs and fostering energy security.
This oil is largely heavy crude, and US firms have invested in complex refineries to process this specific type of low-cost Canadian oil. This is by far the most affordable option for American companies and consumers, and it enables the export of US light crude to countries around the world, creating additional profit for American companies but also creating additional tools to be used in the context of geopolitics.
Canada is the US’s largest supplier of potash, meeting the demand for farmers for use as fertilizer, which means affordable food. It also allows the US to avoid purchasing potash and fertilizer from unreliable countries like Russia and Belarus.
Uranium for nuclear power is also supplied in significant quantities by Canada. In fact, Canadian uranium presently powers the equivalent of almost twenty million homes in the United States. Once again, this enables the US to reduce reliance on producers such as Russia.
And Canada supplies significant quantities of critical minerals including germanium, zinc, nickel, copper, and graphite. These are the building blocks of a range of American economic sectors including defense. In the area of critical minerals typically the alternative source of supply to Canada is China.
Let me also address concerns about a trade deficit between our two countries. If you break it down and look at nonenergy-related trade, the US in fact has a surplus of over fifty billion dollars. The United States is a net exporter to Canada of manufacturing goods, particularly motor vehicles and parts.
Hampering industries with an American trade surplus with tariffs would chiefly disrupt industries where the United States already exports more to Canada. Where I noted, as I noted, parts go back and forth often seven or eight times before a car is complete and for which there are no easy alternatives. It would make these things more expensive while simply not supporting a rebalancing of the trading relationship.
And in the case of energy, the current trade balance also already provides the US advantage by leveraging Canada’s resource abundance to obtain low-cost and secure energy and minerals that the American economy requires, especially if one wants to achieve energy affordability and energy dominance, and the US obtains these products from Canada at a low cost, allowing thousands of American workers to refine and transform them and sell at a higher price to the rest of the world.
Moving past border issues and the reality of the trade balance, it is important to recognize what tariffs would actually do and why we should continue to avoid them after this thirty-day period. They would cause financial pain for Canadian families, no doubt, but they would also significantly increase the price of energy and food for American consumers.
With a tariff on Canadian oil and gas Americans would see higher prices when filling up their gas tanks and heating their homes. Groceries would become more expensive because Canadian potash that supplies American farmers would cost farmers more, and for those who might be planning to buy a new car Wells Fargo has estimated that a 25 percent tariff on Canada would add more than two thousand dollars to the price tag of a car.
Overall, tariffs on Canada, a country that shares your goals and values more than any other country in the world, could cost an average family—American family about $1,300 per year.
As a sovereign democratic nation that must protect its own national interest, the unwarranted imposition of tariffs on Canada would necessarily necessitate a response. But this kind of damage being caused to both of our economies is truly unnecessary and it is ultimately the people of our respective countries who will pay the costs.
That is why our focus is to move beyond this conversation to one about collaboration on the border, on the scourge of illegal drugs, on our economy, and certainly on energy and critical minerals.
Which brings me to my pitch to you today. Rather than going down a path that will inevitably be lose-lose I am suggesting something entirely different. I am suggesting that we should instead build upon current success by developing a US-Canada alliance in energy and minerals.
Such an alliance would enable the United States and Canada to achieve our shared vision for affordable energy bills for families, strong and secure economies, and North America as the world’s dominant energy supplier.
Just a few examples of how we can move in the near term to create mutual benefit. In the areas of critical minerals needed for energy, defense, and aerospace applications there is, for example, an opportunity to jointly invest in a project that would enable greater germanium supply which can displace germanium the United States has been purchasing from China, which China has recently cut off.
We can collaborate on rare earth processing and the augmentation of rare earth supply, once again reducing exposure to and dependence on China. Many will not know that the one large rare earths mine that exists in the United States sends a hundred percent of its product to China presently for processing because the processing technology does not exist here.
With regard to uranium there is an opportunity to work together to build a complete North American nuclear fuel cycle, which would mean relying less on Russia and enhancing continental security. That is something that will be critically important for the ultimate deployment of small modular reactors.
On energy we can enhance the flow of Canadian crude from Alberta to assist the administration’s goal of energy dominance by working together on projects such as enhancing the capacity of the existing Enbridge mainline, enabling the export of additional energy from the US to the world.
There is much opportunity here that can benefit both countries. However, none of this will be possible if we get into this destructive tit-for-tat.
Both countries have a strong interest in the same goals and outcomes, and there is indeed enormous potential if we work together to collectively onshore production and manufacturing and ensure that access to critical energy and materials exists within our collective borders, so we cannot be held hostage by unreliable countries and actors that do not share our values—in particular, China. Rather than looking to erect barriers that will impede trade flows, increase costs for citizens on both sides of the border, and make both countries less secure, let us engage a more positive conversation, a conversation that is focused on seizing enormous economic opportunities and creating additional shared value while enhancing our security—or in other words, form a true energy and minerals alliance.
I and my government are keen to engage these positive and productive conversations to ensure that we can build together a continent that will be more prosperous, more secure moving forward.
So thank you for the invitation to speak to you today, and I look forward to the discussion to come.
DAVID L. GOLDWYN: Great, thank you. Thank you for that positive, positive vision.
I should say that this conversation today is public and on the record, and it’s streaming over YouTube, X, Facebook, and the Atlantic Council website.
So, Minister Wilkinson, you—you know, you posited a very positive potential pathway, but the imposition of the tariffs or the threat must have been a bit of a shock for Canadians. And we see in Mexico now increased talk of producing their own natural gas because they’re worried about continued dependence on the US. Most of Canada’s crude flows through US pipelines out to the gulf to markets. Strategically, do Canadians need to think about alternative routes to the east coast or the west coast as sort of a hedge on the US?
JONATHAN WILKINSON: Well, I would say it was a shock. You know, the original free trade agreement that was signed between Canada and the United States was signed way back in 1988, and the Auto Pact that ensured the free flow of products in the auto sector goes back to the 1960s. So we have looked deep in the integration over the course of the past number of decades because it was so obvious that we were both extracting mutual benefit from the trade that existed. That’s not just in energy and minerals.
And so when all of a sudden Canada is treated more like an adversary than a partner, it did shake every Canadian. And I think you saw that in some of the patriotic expressions that came out in the aftermath of the decision to impose tariffs. Canadians don’t tend to wear their patriotism on their sleeve. We are probably less patriotic overtly than Americans, but you saw it very strongly in Canada.
I think, you know, we need to hopefully walk back from the brink and find pathways through which we can actually work together. But I do think in Canada this has caused some reflection on whether perhaps in some areas we are too dependent on infrastructure in particular that flows only through the United States. We have some things that have been developed over the last number of years, including liquid natural gas facilities on the west coast, that will give us the ability to take some of the gas to Asia. But certainly in the areas like oil, we flow almost all of it this way.
DAVID L. GOLDWYN: Let’s talk about the—unpack the positive agenda a little bit. For President Trump, critical minerals seem to be important. There’s talk about Ukraine exploring critical minerals there as a condition for security support, and this Greenland talk seems to be a little bit about access to Greenland’s critical minerals. So what’s the—what’s the way that the US and Canada can cooperate in this area, either in production—you mentioned two projects earlier, but is there more there? And are you going to use the next thirty days to have this conversation with US officials?
JONATHAN WILKINSON: Yeah, I mean, I think there’s a lot of things that we can do together. Some of them relate to specific projects and some of them are a big more general. One of the challenges with some of the critical minerals has been because of the concentration that exists in Chinese hands, whether it’s in China or it’s in a number of countries like Congo and elsewhere, China has been able to at times manipulate the market. So whenever you are looking to start a project that requires hundreds of millions of dollars, all of a sudden the price goes, you know, goes down significantly and the business case actually falls away. We’ve seen that with lithium. We’ve seen it more recently with nickel, where China has used its dominance to flood the market. And so there is work that can be done between Canada and the US, and probably with Australia and a few others, to actually create some kind of a mechanism around a price floor that will give the business certainty such that you can actually attract private capital for some of these kinds of projects.
There are also some very specific projects that if we made the decision to jointly invest we can pull forward. And the germanium one is one example of that. We have done some coinvesting over the last couple years with the US Department of Defense, but there is a lot more that we could do. And that would help to alleviate the strategic vulnerability, which is a huge strategic vulnerability for the United States in critical minerals, because virtually all of them right now are coming from China.
DAVID L. GOLDWYN: And there’s been talk of a strategic minerals reserve, either on the US or the Canadian side, which could probably help support that price floor. One of the reasons we don’t have as many of those critical minerals produced or processed in the US is—you know, is the challenge of regulation and permitting, and also stakeholder considerations. So deregulation is a big agenda for President Trump. Is there something that can be done on the harmonization of permitting and regulatory decisions that would expedite either critical minerals or pipelines?
JONATHAN WILKINSON: I think there is. Certainly, we’ve done a lot of work to try to figure out how to optimize existing regulatory and permitting processes. As you folks—we’re both federal states—have, the complexity is also some of those reside at the federal level and some of them reside at the state level. And part of it is trying to better align the federal standards with state standards. And to the extent that you can get states to try to harmonize some of their requirements, it certainly would make that conversation easier. We have been working individually with every province to try to actually better align the federal and the provincial.
But certainly, I think there are things that we can both learn from each other. And ideally we can actually find ways to jointly streamline in similar ways, such that you can actually expedite these things. But I mean, clearly, it’s a challenge on both sides of the border. It takes a long time to get mines permitted in Canada. It needs to be much shorter than it is. And we are focused on that. In the United States—and I say this with great respect—but it’s even harder to get a mine permitted in the United States than it is in Canada. But we have been talking a lot, not just to you folks but also to the Australians, and the Chileans, and others who are also thinking exactly about these issues, so.
DAVID L. GOLDWYN: North American energy cooperation used to be a staple. We sort of invented this. You all were going to host the North American Leaders Summit last year, and that got postponed. And I think these tariffs have thrown the viability that concept into a—you know, a little bit into question. Mexico, I think, is concerned as well. But there would seem to be a lot of areas that we could cooperate on, if we were to revive that process. Nuclear is an area of commonality, electricity, regional planning, because we trade so much across the border. Do you think, you know, North America, as a concept, exists? And can you talk a little bit about what you think a positive agenda for a trilateral discussion might be?
JONATHAN WILKINSON: Well, I do—I mean, I think a lot of the elements of it already exist. But there certainly are areas where I think we could push the collaboration for outcomes that would actually be beneficial for both of us and, in some cases, with Mexico as well. Nuclear is a great example. The first small modular reactor—it’s a large one, it’s three hundred megawatts—will be running at an Ontario site adjacent to a very large-scale nuclear reactor in 2027/2028. It’s a GE-Hitachi design. It’s an American-Japanese collaboration that actually produced the technology.
Eventually, as we build out more of these small modular reactors—and everybody’s seen, you know, a lot of the tech firms now getting into this game of this is how they’re going to generate their own—their own electricity—you’re going to need enriched fuel. You need uranium from Canada. You need the conversion of that, but you actually need the enrichment. And United States has enrichment. Canada doesn’t have enrichment. And doesn’t really want to do enrichment because of nonproliferation kinds of issues. But there’s a perfect marriage that we could actually work on together to ensure that we actually can enable the development and the deployment of these technologies as expeditiously as possible.
And Mexico. We saw the handshake, you know, sort of, you know, between the Mexican president and Prime Minister Trudeau. So is there—how do we bring Mexico into that—into that discussion?
JONATHAN WILKINSON: Well, I mean, look, Mexico is blessed with the same—similar resources to what the United States and Canada have, right? Lots of oil. They do have an ability to go after the gas. They have deployed renewables on a relatively large-scale basis. There have been some issues there in terms of Canadian companies and American companies investing, and how that was treated. But I think, you know, there’s lots of learnings. And even on the regulatory and permitting side there’s lots of learnings about what it is that different groups are doing that can actually enable you to go faster.
So I do think, you know, between the three of us we have more than what we need to both build and to power the economy. And we have the ability to actually produce much of what the world needs. And that has value in a world that is going to need more energy—energy of all kinds. You know, and I think, you know, whether you call it energy dominance, or you call it something else, there is an opportunity to use that in a constructive way in a world where, you know, some actors, like Russia, have been using it in a less-than-constructive way.
DAVID L. GOLDWYN: Very helpful. I know you’re not the trade minister, but we’ve got the conversations on USMCA, or whichever national acronym people want to use, coming up. So there will be a conversation. Just in terms of the energy piece, of which the tariffs would be a violation, I guess, of this agreement. But putting that aside, what’s your perspective on Canada’s position on energy and USMCA? Is it sort of, it’s not broke, don’t fix it? Or is there more to be done that would deepen the energy cooperation between the three countries?
JONATHAN WILKINSON: Yeah. I mean, I do think that there’s more that can be done. It needs to be part of an overall agreement around—that the tariffs aren’t coming back, right? You know, at the end of the day we need to actually have a pathway that allows us to deepen the collaboration, if we agree that that’s a good thing, without thinking six months from now we’re back into the same conversation that we were in the last few days. But I do. Some of the projects that I talked about there are things that would actually help to deepen the collaboration.
Like, why does the United States purchase so much uranium and potash from Russia? You don’t need to. If we actually work together, you can be completely secure. Why are so many critical minerals being purchased from China? You don’t need to. If we work together and we actually pull forward some of these projects—you know, the same thing is true, as I said, with oil and gas. So I do think that there’s lots that we can do. Starting with some very specific projects but looking more generally down the road, creating joint tools that can allow us to actually make joint investments. I do think that there is a real scope for those kinds of conversations. But it starts with—it starts with, you know, us agreeing that collaboration and deepening that relationship is the right way to go.
DAVID L. GOLDWYN: Let me ask you a question about Liberal Party politics, if I can. You all are facing an interesting political season in Canada.
JONATHAN WILKINSON: Yeah.
DAVID L. GOLDWYN: You’ve got two candidates now up for consideration, Chrystia Freeland and Mark Carney, who are well known around the world, and they’ve talked—both talked about pulling back the carbon tax on consumers, leaving the carbon tax on the industrial sector in place. Can you just paint us—what’s the future of sort of energy and climate policy for the Liberal Party going forward?
JONATHAN WILKINSON: Well, you’re asking somebody who got into politics because of climate change. And I had the great privilege of serving as Canada’s environment and climate change minister for three of four years and brought into place the first climate plan Canada’s ever had that showed how we would not only beat a target, but we would raise the target because we would exceed that. So I am committed to the fight against climate change. It’s a science issue. It shouldn’t be a partisan issue. It is a science issue.
But we need to do that in a manner that is thoughtful, that addresses concerns—legitimate concerns people have about affordability, and does so in a manner that actually ideally enhances our own energy security. This government, whether it’s Mr. Carney or Ms. Freeland who ultimately lead the Liberal Party and become the next prime minister of Canada, are committed to the fight against climate change, but they want to do so in a manner that actually also is going to help us to build a strong and prosperous economy. I don’t think you are going to see a lot of fundamental changes.
The consumer carbon price, I mean, 80 percent of the value of carbon pricing comes from the industrial price, where you’re actually going after the large emitters. Twenty percent comes from the consumer carbon price. I’m still a believer in the consumer carbon price in the sense that it is the most economically efficient way to actually reduce emissions, that incents innovation. And 99.9 percent of economists will tell you the same thing. It’s a market mechanism. But it became very divisive in Canada, especially regionally, and both of the candidates have made the decision that they will remove the consumer part of the carbon price, not the industrial price.
And the other thing that they have been very clear on is that they will find the megatons that would have been found through the consumer price in a different way. They are not abandoning the fight on climate change.
DAVID L. GOLDWYN: That’s great. Thank you.
Well, unfortunately, our time today has come to a close. Thank you, Minister Wilkinson, for your candor and for painting this positive vision of US-Canadian energy—of the energy relationship.
As a reminder, the recording of the event will be available on the Atlantic Council website and on our YouTube page, and we hope you’ll join us for future events. Thank you.
Watch the full event
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Image: Canada's Minister of Energy and Natural Resources Jonathan Wilkinson speaks during Question Period in the House of Commons on Parliament Hill in Ottawa, Ontario, Canada September 24, 2024. Photo via REUTERS/Blair Gable.