CAN-USA Tariff Strife (split from various pol threads)

[suffolkowner]

View attachment 90917

Some back of the envelope economics from a poor salesman.

September 1st 2024, before Trump was elected and before any tariffs had been discussed Alberta Oil (WCS) was selling in the States at 55.90 USD per barrel.
The WCS was displacing the homegrown WTI which the US was selling on the open market at 70.24 USD per barrel allowing the States to pocket 14.34 USD per barrel as gross revenue.

At that time the Canadian Dollar was trading at 74 US Cents on the Canadian Dollar.
At that price and exchange rate Alberta was pocketing 75.54 CAD per barrel.
And the Alberta budget was looking pretty healthy.

...

Changes.

...

Today WCS is selling in the States at 61.42 USD per barrel. The price the US refineries are paying has risen 10%.
WTI is selling for 72.53 USD per barrel giving allowing the US to pocket 11.11 USD per barrel as gross revenue. The revenue has fallen 22%.

Today the Canadian Dollar is trading at 69 US Cents on the Canadian Dollar. A 7% reduction in the value of the Canadian Dollar.
At today's price and exchange rate Alberta is pocketing 89.01 CAD per barrel. An 18% increase in the revenue stream to Alberta.
And the Alberta budget is looking even healthier.

...

Future with a 10% tariff added.

With a 10% tariff on top of today's price the US refineries will be paying 67.56 USD per barrel.
Assuming that WTI is still selling at today's price of 72.53 USD (a poor assumption) then the US will only be pocketing 4.97 USD per barrel

Alberta will still be pocketing 89.01 CAD per barrel.

Is it still worth the US refineries' effort? Possibly not.

...

Solution

Alberta sells oil at 75.54 CAD per barrel, its Sept 1 2024 price. With the weaker dollar and the reduced price then the US refineries will be paying 57.34 USD per barrel for the WCS and be selling WTI at 72.53 USD resulting in a revenue stream of 15.19 USD per barrel.

The refineries will actually be making 85 Cents a barrel more than they were before the tariff was imposed and Alberta is making exactly the same.

...

These types of changes are well within the "natural" flux the markets experience. There is nothing world ending about them.

WCS is priced at Hardisty is it not and WTI at Cushing?

 

[Fishbone Jones]

Yes. Trudeau went down to maralago to discuss. This isn’t news.

He may have gone there to discuss, but it wasn't on Trumps agenda. All trudeau got for his trip was spanked. Dinner conversation is not negotiation. If you want to consider it as negotiation, trudeau failed absolutely miserably. He doesn't have the mental acuity to deal with Trump.

 

[suffolkowner]

There’s a limited one to postpone the election, found in s.59 of the Canada Elections Act. It’s not a simple matter of the PM waving his hand and declaring an emergency. It certainly would not achieve what G2G suggested could happen.



But I wasn’t replying to you suggesting a legislative amendment. As a reminder:

you reference the Canada Elections Act but are not these provisions already in the Constitution?

Provision​

4. (1) No House of Commons and no legislative assembly shall continue for longer than five years from the date fixed for the return of the writs at a general election of its members.

(2) In time of real or apprehended war, invasion or insurrection, a House of Commons may be continued by Parliament and a legislative assembly may be continued by the legislature beyond five years if such continuation is not opposed by the votes of more than one-third of the members of the House of Commons or the legislative assembly, as the case may be.

I was under the impression that (2) was a little more permissive on what reasons for an extension and more limited by one year on the extension. A pre Charter thing perhaps?

 

[Good2Golf]

you reference the Canada Elections Act but are not these provisions already in the Constitution?

Provision​

4. (1) No House of Commons and no legislative assembly shall continue for longer than five years from the date fixed for the return of the writs at a general election of its members.

(2) In time of real or apprehended war, invasion or insurrection, a House of Commons may be continued by Parliament and a legislative assembly may be continued by the legislature beyond five years if such continuation is not opposed by the votes of more than one-third of the members of the House of Commons or the legislative assembly, as the case may be.

I was under the impression that (2) was a little more permissive on what reasons for an extension and more limited by one year on the extension. A pre Charter thing perhaps?

The Government had enacted the Emergencies Act for vehicles on Wellington Street, so it’s not out of the realm of possibility that the Government makes the case that POTUS 47 represents an existential threat to Canada and that the Government see fit to enact the EA.

I’m not sure why people don’t think PM Carney would do this.

 

[Kirkhill]

WCS is priced at Hardisty is it not and WTI at Cushing?

I know those are transit hubs. I don't know if they are necessarily the pricing points. I look forward to being educated.

 

[QV]

Marco Rubio talks about Panama, Greenland, Mexico, and Canada. Though he didn’t specifically state “China” when speaking of Canada, that was a major theme with the other areas. I estimate China is a big factor in why the US is pursuing what it is with Canada. I get the feeling the US is avoiding publicly calling Canada out on its China problem, for now.

 

[Remius]

He may have gone there to discuss, but it wasn't on Trumps agenda. All trudeau got for his trip was spanked. Dinner conversation is not negotiation. If you want to consider it as negotiation, trudeau failed absolutely miserably. He doesn't have the mental acuity to deal with Trump.

My point still stands. There is no négociation to be had. His card was revealed. So at least now it helps shape the response.

The USA is no longer a friendly trade partner.

 

[dapaterson]

POTUS 47 is relying on emergency powers too...

 

[QV]

The Government had enacted the Emergencies Act for vehicles on Wellington Street, so it’s not out of the realm of possibility that the Government makes the case that POTUS 47 represents an existential threat to Canada and that the Government see fit to enact the EA.

I’m not sure why people don’t think PM Carney would do this.

It’s not like the bar hasn’t been set pretty low already for the EA.

 

[Good2Golf]

I get the feeling the US is avoiding publicly calling Canada out on its China problem, for now.

Key point. It’s coming soon.

Canada’s response to the watery Hogue Report will be a significant factor in subsequent US actions, amongst other factors. It will likely be not long before Canadians find out who the 11 compromised parliamentarians are, likely just after Carney’s coronation. indeed.

 

[suffolkowner]

I know those are transit hubs. I don't know if they are necessarily the pricing points. I look forward to being educated.

well you have to be careful on what numbers you are using as they can be priced elsewhere. But im pretty sure most WTI you see is out of Cushing and WCS is out of Hardisty. You might see WCS out of Cushing and Houston as well.

How much of the value of WCS is the dilbit? 25%, 33%?

 

[QV]

Key point. It’s coming soon.

Canada’s response to the watery Hogue Report will be a significant factor in subsequent US actions, amongst other factors. It will likely be not long before Canadians find out who the 11 compromised parliamentarians are, likely just after Carney’s coronation. indeed.

My thoughts as well. Canada has made a very large mistake handwaving away that issue. Unless there are significant things happening outside of public view, but I’d have my doubts.

 

[RangerRay]

Key point. It’s coming soon.

Canada’s response to the watery Hogue Report will be a significant factor in subsequent US actions, amongst other factors. It will likely be not long before Canadians find out who the 11 compromised parliamentarians are, likely just after Carney’s coronation. indeed.

Are you sure? Where are you hearing this? I know some Trump-friendly law enforcement experts like David Asher has been bringing this up, I have seen nothing to suggest the upper echelons of the Trump administration are seized by our issues with Beijing’s interference, influence and intimidation campaigns. If they are, they’re being very quiet about it.

I really don’t think Trump cares what we do or don’t do on the foreign interference file. He’s got a boner for tariffs and he’s convinced he can replace the money from income taxes with tariffs.

 

[Czech_pivo]

He may have gone there to discuss, but it wasn't on Trumps agenda. All trudeau got for his trip was spanked. Dinner conversation is not negotiation. If you want to consider it as negotiation, trudeau failed absolutely miserably. He doesn't have the mental acuity to deal with Trump.

And along those lines neither does PP.
Who would have to ability is a savvy businessperson, who bereaved in the rough and tumble world of capitalism. Sadly we lack that level of knowledge/intelligence/leadership currently at the Federal level.
Mulroney did so well against Regan business he was a savy businessman….

 

[QV]

If you listen to Rubio, you would understand everything Trump is doing about Panama and Greenland is directly to counter China’s moves. I think the trade imbalance issue with Canada is a temporary distraction. The real issue is China. Canada is getting the most favoured nation courtesy by not going public with just how bad the problem is, for now. The US will not tolerate a CCP puppet state on its border.

 

[Good2Golf]

Are you sure? Where are you hearing this? I know some Trump-friendly law enforcement experts like David Asher has been bringing this up, I have seen nothing to suggest the upper echelons of the Trump administration are seized by our issues with Beijing’s interference, influence and intimidation campaigns. If they are, they’re being very quiet about it.

I really don’t think Trump cares what we do or don’t do on the foreign interference file. He’s got a boner for tariffs and he’s convinced he can replace the money from income taxes with tariffs.

Yea, I am confidently sure of this. I trust that my friends and their colleagues inside the beltway know what factors are at play. I’m confident in what I’m hearing from them. I can’t convince you otherwise, but that’s fine. We’re all collecting our own basis of information and different sources will have different inputs/factors for consideration. In many cases it’s no so much one specific fact here or there but the patterns forming an overall environment. All good….well not, but all good as in each person is free to make their own assessment and form their own opinions of the situation.

Trump is the driver of the tariffs, yes, and believing that America can gain increased revenue from other nations through trade restriction, but it would be a mistake to believe that the back room side of DC hasn’t been, nor doesn’t remain concerned about China’s interference, particularly in Canada (ie. immediately north of America).

 

[RangerRay]

Yea, I am confidently sure of this. I trust that my friends and their colleagues inside the beltway know what factors are at play. I’m confident in what I’m hearing from them. I can’t convince you otherwise, but that’s fine. We’re all collecting our own basis of information and different sources will have different inputs/factors for consideration. In many cases it’s no so much one specific fact here or there but the patterns forming an overall environment. All good….well not, but all good as in each person is free to make their own assessment and form their own opinions of the situation.

Trump is the driver of the tariffs, yes, and believing that America can gain increased revenue from other nations through trade restriction, but it would be a mistake to believe that the back room side of DC hasn’t been, nor doesn’t remain concerned about China’s interference, particularly in Canada (ie. immediately north of America).

If you say so. I’ll trust you have sources but nothing has been mentioned about this publicly. If they are really seized by the issue and want to make the Government of Canada take this seriously, they’re being very probably should go public so public pressure can be properly brought to bear on the government.

“Oh, it’s not you. It’s really us!”

 

[Good2Golf]

It’s not that my sources are anything nefarious, they’re all out there and have their various visibility to those who at least want to consider the information available.

Follow but one path for consideration:

Chinese interference/illegal activities in Canada > investigations > CSIS > David Vigneault > Striker Technologies > H.R. McMaster > past National Security Advisor to Trump > Trump

Consider the linkages…or don’t. Nicht aufgeregt.

 

[Brad Sallows]

It might help to stop trying to see this issue in a different frame from the way everything else almost inevitably unfolds.

Trump's egregious exercises of executive power usually produce swift push-back, particularly using courts. We are not in a "trade war with Americans". The US is not an unreliable trading partner. All of this is on Trump and some supporters who are thinking qualitatively instead of quantitatively or who are just ignorant to the bone on basic matters of trade. There are plenty of American interests that will be harmed by tariffs, regardless on whom tariffs are imposed. Give Americans some time to respond to whatever concrete action eventually emerges, if any, before escalating damage to trade.

Meanwhile, focus on offsetting anticipated GDP losses with domestic undertakings that will goose GDP. Our politicians have had almost three months to execute on things that would make sense even without the threat of widespread tariffs. Why are they so slow to act? Are they talking "unity in crisis" while they privately wish to maintain status quo if they can get away with it?

Call our politicians out. Put them on the spot. Identify easy - preferably unilateral - actions that they could take, right now or very quickly, and demand to know why those things haven't already been done. Force them to disclose reasons for perpetuating internal impediments to trade flows, or to reveal that they have no good reasons.

 

[Good2Golf]

Meanwhile, focus on offsetting anticipated GDP losses with domestic undertakings that will goose GDP. Our politicians have had almost three months to execute on things that would make sense even without the threat of widespread tariffs. Why are they so slow to act? Are they talking "unity in crisis" while they privately wish to maintain status quo if they can get away with it?

Three months, or years and years?