America’s neighbor is hitting back against the incoming President with its own threats.

It’s a little-known fact that we Americans get quite a bit of our electricity from Canada. Unfortunately, our friendly neighbors to the north are currently considering turning off the electrical flow if a certain incoming President goes through with his plan to impose major tariffs on their country.

The not-so-friendly proposal was offered this week by Doug Ford, the premier for Ontario, which is Canada’s second-largest province. Ford, who revealed the information Wednesday during a conversation with Michigan Gov. Gretchen Whitmer, said he would restrict electricity exports to Michigan, New York and Minnesota, should Donald Trump make good on his threat to impose tariffs on Canada.

Per the Associated Press: “It’s a last resort,” Ford said. “I don’t think President-elect Trump wants that to happen. We’re sending a message to the U.S. If you come and attack Ontario, you attack the livelihoods of people in Ontario and Canadians, we are going to use every tool in our tool box to defend Ontarians and Canadians. Let’s hope it never comes to that.”

Ford also claimed he was considering limiting the export of certain minerals that are vital to the manufacturing of electric car batteries. It stands to reason that both of those things could have negative impacts on EV makers in the U.S., which would be particularly bad for Trump’s political ally, Tesla CEO Elon Musk. Ford also mused about limiting Canadian alcohol exports to the U.S.

An analysis from the Electrical Information Administration notes that the U.S. and Canada have a deeply intertwined energy system, in which physical cables deliver power to many communities on both sides of the national border. Historically speaking, Canada has exported a lot more electricity to the U.S. than it has imported, though, in recent years, that dynamic has shifted somewhat. In 2023, the electrical sales from Canada to the U.S. represented some $3.2 billion. Ontario delivered power to some 1.5 million U.S. households last year, the Associated Press notes.

Prior to the election, a host of economists warned that if Trump went through with his plan to impose major tariffs on countries throughout the world, it would have a huge, potentially catastrophic impact on Americans’ pocketbooks. Defenders of Trump’s proposal have mostly characterized it as a “bargaining” strategy, which is designed to elicit political and economic concessions from the countries he targets. “The President, I think, will use them as bargaining chips—I think that’s important for everyone to keep in mind,” said Former National Economic Council director Larry Lindsey, in a recent conversation with Fox News. “It’s how the bargain ultimately works out in the end that’s going to determine whether it was a successful strategy,” he said.

I’m not sure how great a “bargaining” tactic it is if you openly admit that Trump has no intention of following through on his threat, but I suppose we’ll have to wait and see whether the incoming President can—like his book famously put it—cut a deal.

China pledged Thursday to increase the budget deficit, borrow more and loosen monetary policy to maintain stable economic growth as it girds for more trade tensions with the United States where Donald Trump is returning as president.

The remarks came in a state media readout of an annual agenda-setting meeting of China’s top leaders, known as the Central Economic Work Conference, held on December 11-12.

“The adverse impact brought by changes in the external environment has deepened,” national broadcaster CCTV said following the closed-door CEWC.

This year’s meeting came with the world’s second-largest economy stuttering due to a severe property market crisis, high local government debt and weak domestic demand. Exports, one of the few bright spots, face the threat of higher US tariffs.

A separate readout from state news agency Xinhua, watched by financial markets for references to the yuan currency, kept a pledge to “maintain the basic stability of the exchange rate at a reasonable and balanced level.”

The CEWC pledges match the tone of one of the Communist Party leaders’ most dovish statements in more than a decade, which was released Monday after a meeting of the Politburo, a top decision-making body.

The Politburo said China would switch to an “appropriately loose” monetary policy stance and “more proactive” fiscal levers, as well as stepping up “unconventional counter-cyclical adjustments.”

In the same vein, the CEWC summary flagged a higher budget deficit and more debt issuance at a central and local government level. Leaders also vowed to reduce bank reserve requirements and cut interest rates “in a timely manner.”

“The direction is clear, but the size of stimulus matters, which we probably will find out only after the US announces the tariffs,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

This dovish shift in messaging shows China is prioritizing growth over financial risks, analysts said.

At CEWC, Beijing sets targets for economic growth, the budget deficit, debt issuance and other variables for the year ahead. The targets are agreed at the meeting but won’t be officially released until an annual parliament meeting in March.

The CEWC readout said it was “necessary to maintain steady economic growth,” but did not mention a specific rate.

“Maintaining 5% will be quite challenging in 2025, given that the extra ‘Trump shock’ will hit exports” and capital expenditure, said Xu Tianchen, senior economist at the Economist Intelligence Unit.

“However, a good level of stimulus will prevent a freefall, and I don’t think growth will tank below 4.5%.”

Tariff threats

Trump’s tariff threats have rattled China’s industrial complex, which sells goods worth more than $400 billion annually to the US. Many Chinese manufacturers have been shifting production abroad to escape tariffs.

Exporters say the levies will further shrink profits, hurting jobs, investment and economic growth in the process. They would also exacerbate China’s industrial overcapacity and deflationary pressures, analysts said.

If exports take a hit, China needs to look internally for a new growth engine. But consumers feel less wealthy due to falling property prices and minimal social welfare. Low household demand poses a key risk to growth.

Beijing has issued increasingly forceful statements on boosting consumption throughout the year, but it has offered little in terms of policies apart from a subsidy scheme for purchases of cars, appliances and a few other goods.

The CEWC summary said the scheme would be expanded and pensions raised, and that efforts would be made to increase household incomes and “vigorously boost consumption.”

“Markets could be encouraged,” said Lynn Song, ING’s chief economist for Greater China. “The call to vigorously boost consumption is a good sign.”