Energy experts expect President-elect Donald Trump’s promise to impose a blanket tariff of at least 10 per cent on all imports including from Canada is unlikely to apply to Canadian oil.
The threat of tariffs is causing a lot of concern north of the border, with the Canadian Chamber of Commerce saying such a tariff could do $30 billion in damage to the Canadian economy.
Rory Johnston, a Toronto-based oil market researcher and founder of Commodity Context, said he believes there is a very slim possibility of Trump’s tariffs being implemented on Canadian oil, but it is a “very damaging prospect.”
“Canada is uniquely vulnerable to market pressures imposed by U.S. refiners given our lack of an alternative exit,” Johnston said during a Canadian Global Affairs Institute panel discussion on Wednesday.
Michael Catanzaro, a former energy adviser to Trump, told a forum in Washington, D.C., last week that he does not expect Canada to dismiss Trump’s campaign vision of energy dominance and low energy costs.
“We have to underscore the fact that the United States and Canada together can be this powerful force,” he said at the North American Energy Supremacy Forum hosted by the right-wing Hudson Institute in Washington on November 8.
More than 77 per cent of Canadian exports go to the United States, and trade accounts for 60 per cent of Canada’s gross domestic product. A large percentage of it comes from oil and gas.
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Canada is also the largest source of US energy imports, and almost all of Canada’s crude oil exports went to its neighbor in 2023. Most of that is making its way via pipelines to the Midwest, where key battleground states have flipped to Trump on promises to return life to normal. More affordable.
Without exceptions for Canadian crude, many experts agree that costs at the U.S. pump are sure to rise. Johnston said the Republican leader is unlikely to take action that would increase the cost of gas.
Johnston added that there may be a situation where Canada sees a blessing from Trump’s tariffs. If the Republican leader imposes these tariffs on all oil imports except Canada, “that would actually be a good thing for Canadian exports.”
But all of this comes with the caveat of a tense relationship between Prime Minister Justin Trudeau and Trump, and Canada’s Liberal government has been at political odds with Republicans on a number of fronts including climate action and renewable energy.
Catanzaro noted his meeting with Canadian officials after Trump withdrew the United States from the Paris Climate Agreement, an international treaty to cut greenhouse gases, during his first administration — a move the president-elect promised to repeat.
“They were very hostile to us and the administration,” Catanzaro said.
Catanzaro said Canada’s reaction set bilateral relations back for some time.
Finn Hampson, a professor of international affairs at Carleton University in Ottawa and co-chair of the Expert Group on Canada-U.S. Relations, said he’s not sure the Republican leader would be willing to offer a tariff concession under Trudeau.
Hampson said Trump would know that granting Canada an immediate waiver would provide Trudeau with a strong argument about his ability to negotiate with the president-elect before the looming Canadian election. Hampson added that the Republican leader would not be happy with this outcome, given their noticeably tense relationship during Trump’s first administration.
Trump called Trudeau “weak” and “dishonest” after the prime minister criticized the president’s 2018 tariff measures at the G7 summit in Quebec. There was another outburst when Trudeau and other NATO leaders appeared on video speaking at a Trump news conference the following year. Trump described the Prime Minister as “two-faced.”
Robert Lighthizer, Trump’s trade representative at the time, recounted in his book that relations between the United States and Canada were “at their lowest point since the failed American invasion of Upper Canada during the War of 1812.”
The agreement between Canada, the United States and Mexico, which was negotiated under the first Trump administration, will be subject to review in 2026. Hampson said Trump could use tariffs, or the threat of them, to force Canada to make concessions.
Wilbur Ross, the former US Commerce Secretary who participated in the negotiations for that trilateral agreement, recently told CBC that Trump would likely get waivers for sectors such as Canadian oil and gas.
Politicians run for office with poetry and govern with prose, said Eric Miller, president of the Rideau Potomac Strategy Group, agreeing that broad tariffs on Canadian energy are unlikely.
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