U.S. President Donald Trump’s trade war has kicked up a long-overdue debate in Canada about the need to diversify its exports, and oil is emerging as a prime example of how infrastructure can make that happen.
In May 2024, the Trans Mountain pipeline expansion finally began operations after years of delays, cost overruns and a takeover by the federal government. Almost immediately, the pipeline—which has the capacity to move 850,000 barrels a day to the West Coast—began to shift Canada’s energy export picture. As of March, Canada’s bitumen crude exports to non-U.S. markets climbed to roughly 7%, after being stuck at around 3% for years. The pipeline is also credited with earning Canadian oil producers better prices—the discount at which Western Canadian Select heavy crude sells compared to the U.S. West Texas Intermediate benchmark price has narrowed to less than US$10 a barrel, close to US$5 a barrel better than the historical average, according to TD Bank economist Marc Ercolao.
China has been the largest non-U.S. market snapping up Canadian oil exports over the past year, but other markets include the Netherlands, Singapore, Spain and India, according to Statistics Canada trade data.
This could put Trump’s isolationist bravado to the test, especially as the U.S. shale boom shows signs of slowing. The U.S. is now the world’s largest oil producer, and while it does produce enough to meet domestic demand, many refineries in the U.S. Midwest are built to process the type of heavy oil Alberta sends south. As such, the U.S. relied on Canada for two-thirds of its oil imports last year, putting the lie to Trump’s assertion the U.S. needs nothing that Canada has to sell.
Which is likely why Trump limited his tariffs on Canadian energy imports to 10% compared to 25% for many other goods (at least those that aren’t compliant with the United States-Mexico-Canada Agreement.)
But with a growing share of Canadian oil now headed to non-U.S. markets, and consensus building about the need for new pipelines, it’s a reminder of why even more trade diversification is needed.
Editor’s note: A previous version of this story incorrectly said the U.S. doesn’t produce enough oil to meet domestic demand. The U.S. does produce enough to meet its needs, but selectively imports to minimize costs.
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