As U.S. president-elect Donald Trump prepares to enact a sweeping tariff of at least 10 per cent on all imports, energy experts predict Canadian oil might be spared. The proposal has raised concerns in Canada, with the Canadian Chamber of Commerce warning that such a tariff could cost the Canadian economy $30 billion. However, analysts argue that the unique trade relationship between the two countries may work in Canada’s favor.
Rory Johnston, an oil market researcher and founder of Commodity Context, noted the significant risk posed by U.S. refineries’ dependence on Canadian oil due to limited export options for Canada. He suggested that while the likelihood of tariffs on Canadian oil is low, the potential impact could be severe.
Michael Catanzaro, a former Trump energy adviser, emphasized the benefits of a strong U.S.-Canada energy partnership. Speaking at the North American Energy Preeminence Forum, he highlighted the combined strength of the two nations, suggesting that Trump’s energy policies might align with preserving affordable energy costs, which could include exemptions for Canadian oil imports.
Given that over 77 per cent of Canadian exports go to the U.S., with oil and gas being significant contributors, an exemption could prevent increased fuel prices at American gas stations, an outcome Johnston believes Trump would avoid. He also pointed out that excluding Canada from tariffs could benefit Canadian exports overall.
However, the rocky political relationship between Trump and Prime Minister Justin Trudeau complicates matters. Fen Hampson of Carleton University noted that Trump might be reluctant to grant Canada an immediate exemption to avoid strengthening Trudeau’s political position ahead of Canada’s upcoming election. Past interactions, including Trump’s criticisms of Trudeau as “weak” and “dishonest” after the 2018 G7 summit and a later incident at NATO, underscore the strained relations between the leaders.
Despite these tensions, former U.S. commerce secretary Wilbur Ross recently suggested that Trump might still carve out exceptions for key sectors like oil and gas. Eric Miller, president of Rideau Potomac Strategy Group, agreed, stating that while campaign promises can be bold, governing decisions often prove more pragmatic.
The Canada-U.S.-Mexico Agreement (CUSMA), renegotiated during Trump’s first term, will face a review in 2026, and experts believe the president-elect could leverage tariff threats to secure concessions from Canada. As discussions continue, the prospect of tariff exemptions for Canadian oil remains a pivotal point in navigating the U.S.-Canada energy relationship.