Trump’s Tax Cuts, Tariffs Force Trudeau To Retreat On Carbon Taxes

Michael Bastasch | Energy Editor

Canadian Prime Minister Justin Trudeau’s administration will scale back plans to tax carbon dioxide emissions from industrial operations amid intense political backlash from conservatives and businesses.

Two Canadian provinces — Saskatchewan and Ontario — are suing the central government over its carbon tax, but the industry is chafing against Trudeau’s carbon tax because of pressures south of the border.

President Donald Trump’s protectionist tariffs and tax cuts are putting competitive pressures on Canadian industries. Trudeau’s carbon tax, they fear, would only make them less competitive.

Trump slapped tariffs on Canadian steel and aluminum imports in June, sparking retaliatory tariffs from Canada. The U.S. is now suing Canada and other countries in the World Trade Organization over these retaliatory tariffs.

Tax cuts signed into law by Trump late in 2017 also put competitive pressures on Canada, according to news reports. GOP-led tax relief lowered the U.S. corporate tax rate to 21 percent.

Now, Canadian regulators are adjusting the threshold at which a carbon tax kicks in for large industries.

Regulators met with industry representatives and “determined that four industries in particular — cement, iron and steel, lime and nitrogen fertilizer producers — face a high competitive risk,” The Canada Press reported Wednesday.

Those industries will only pay the carbon tax for emissions over their sector’s average. The Trudeau administration will now raise those thresholds from 70 percent to 80 percent for some industries and 90 percent for others.

Trudeau could scale back Canada’s carbon tax even further before it takes effect in 2019. (RELATED: Watchdog Group Sues State Dept For Info On A Sketchy Obama-Era Climate Lobbyist)

Political resistance to a carbon tax is expected to grow in the run up to next year’s election. Former Toronto Mayor Doug Ford’s Progressive Conservative coalition won a landslide victory earlier this year in Ontario on a platform that included scrapping the province’s cap-and-trade system.

Ford will also join Saskatchewan’s lawsuit against Trudeau’s carbon tax, which is imposed on provinces that don’t have climate policies to price carbon dioxide emissions.

“The carbon tax is the single worst tax anyone — not just in Ontario — Canada could ever have,” Ford said on the campaign trail.

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