Canada’s energy industry assumes Trump’s trade measures will exclude Canadian oil, as US refineries deeply rely on Canada’s exclusive crude supply.
As many American refineries depend on Canadian crude, Canada’s energy industry mostly believes that U.S. President-elect Donald Trump’s protectionist trade measures are improbable to include tariffs on Canadian oil imports.
Who predicted a boost in North American energy investment and potentially higher returns in US dollars for Canadian crude, Trump’s election initially elevated hopes among some Canadian oil industry players. Others expressed concerns that a rise in US oil and gas production could intensify competition for Canadian exports in global markets.
Canada exports approximately 4 million barrels of crude oil per day, with the vast majority heading to the United States, as the fourth-largest oil and sixth-largest natural gas manufacturer globally. Any disruption in this trade could meaningfully impact Canada’s economy.
Analysts generally approve that Canadian oil is unlikely to be affected, as US refineries depend heavily on it, although Trump has stated a potential tariff on imports. Making it hard to substitute with lighter domestic shale oil, Canadian heavy crude is largely suited to US refineries in the Midwest and Gulf Coast, which have invested in processing facilities for these types of oil.
Canada provides nearly all of the crude feedstock, particularly Midwest refineries, which supply main cities such as Chicago and Detroit. For American consumers, imposing tariffs could upsurge refining costs and lead to higher fuel prices.
Commodity analyst Rory Johnston estimates that a hypothetical 20% tariff could sharply increase the current price discount on Canadian heavy crude. Johnston warns that even the probability underscores Canada’s vulnerability to US trade policies, as he considers the chances of such a tariff low.
The Canadian energy sector remains at risk due to its reliance on US demand, while Trump’s proposed tariffs appear doubtful to target Canadian oil. Pushing down prices further, a drop in US purchases could leave Canadian crude marooned in Alberta.