The threat of the tariff is causing a lot of concern in Canada, where the Canadian Chamber of Commerce said such a tariff could take a $30-billion bite out of the Canadian economy.
Energy analysts anticipate that Canadian oil will not likely be subject to President-elect Donald Trump’s pledge to impose an overall tax of at least 10% on all imports, including those from Canada.
North of the border, where the Canadian Chamber of Commerce estimates that a duty of this magnitude could have a negative impact of $30 billion on the Canadian economy, the fear of the tax is generating a great deal of anxiety.
Although he thinks there is very little chance that Trump’s levies will apply to Canadian oil, Rory Johnston, creator of Commodity Context and an oil market researcher based in Toronto, said it is “quite a potentially damaging one.”
As part of a session for the Canadian Global Affairs Institute on Wednesday, Johnston stated, “Canada is particularly vulnerable to market pressure posed by U.S. refineries given our lack of alternative egress.”
Former Trump energy advisor Michael Catanzaro stated at an event last week in Washington, D.C., that he does not anticipate Canada would be left out of Trump’s campaign goal of energy supremacy and reduced energy costs.
At the right-leaning Hudson Institute’s North American Energy Preeminence Forum in Washington on November 8, he stated, “We should double down on the fact that the U.S. and Canada together can be this powerful force.”
Over 77% of Canada’s exports are sent to the United States, and commerce accounts for 60% of the country’s GDP. Oil and gas account for a sizable amount of it.
The United States buys the greatest energy from Canada, and in 2023, about all of Canada’s crude oil exports went to its neighbor. The majority of that travels via pipelines to the Midwest, where Trump won support in crucial swing areas by promising to lower living expenses.
Many analysts concur that the price at American pumps would undoubtedly rise if there were no exemptions for Canadian crude. According to Johnston, the Republican leader is unlikely to take any move that would raise the price of petrol.
According to Johnston, there may be a scenario in which Trump’s tariffs benefit Canada. In fact, Canadian exports will benefit if the Republican leader imposes such levies on all oil imports excluding Canada.
However, it should be noted that Prime Minister Justin Trudeau and Trump have had a tense relationship, and the Liberal administration in Canada has been at differences with the Republicans on a number of issues, such as renewable energy and climate change.
After Trump withdrew the United States from the Paris Climate Accord, an international pact to reduce greenhouse gas emissions, during his first term, Catanzaro remembered a meeting with Canadian authorities. The president-elect has pledged to repeat this action.
According to Catanzaro, “they were very hostile to us and to the administration.”
According to Catanzaro, the Canadian response temporarily harmed the two countries’ relationship.
Co-chair of the Expert Group on Canada-U.S. Relations and professor of international affairs at Carleton University in Ottawa, Fen Hampson, expressed doubt that the Republican leader would agree to a tariff concession under Trudeau.
According to Hampson, Trump would be aware that granting Canada an instant exception would provide Trudeau a strong defense of his capacity to engage in negotiations with the president-elect before Canada’s impending election. Given their noticeably tense relationship during Trump’s first term, the Republican leader would not be pleased with that result, Hampson said.
Following the prime minister’s criticism of the president’s 2018 tariff moves during the G7 conference in Quebec, Trump referred to Trudeau as “weak” and “dishonest.” When Trudeau and other NATO leaders seemed to be on camera discussing a Trump news conference the following year, there was yet another uproar. The prime minister was referred to by Trump as “two-faced.”
U.S.-Canada relations were “at their lowest ebb since the failed American invasion of Upper Canada during the War of 1812,” according to a book written by Robert Lighthizer, Trump’s trade representative at the time.
In 2026, the Canada-U.S.-Mexico Agreement—which was negotiated during the first Trump administration—will be reviewed. Trump might use tariffs, or the prospect of them, to pressure Canada into making concessions, according to Hampson.
Former U.S. Commerce Secretary Wilbur Ross, who participated in the trilateral agreement’s negotiations, recently told CBC that Trump is likely to create exclusions for industries like Canadian oil and gas.
While acknowledging that broad tariffs on Canadian energy were improbable, Eric Miller, president of Rideau Potomac Strategy Group, argued that politicians seek for government in poetry and rule in prose.