After threatening the use of export tariffs on Canadian crude, the federal government has not ruled out leveraging the resource in trade negotiations with the Trump administration.

"Of course, there's oil and gas,” Foreign Minister Melanie Joly told a Toronto business audience yesterday. She clarified: “We haven’t put that on the table yet, guys.” 

Thus far, no formal announcement has been made by Ottawa, suggesting it would reduce crude exports or impose tariffs on them, reported Reuters.

“We kept that in our game, as cards that we could potentially play if this would escalate, and the U.S. knows that,” Joly said.

Alberta Premier Danielle Smith rejects Foreign Affairs Minister Melanie Joly’s suggestion of imposing an energy embargo on the US, calling it an empty, impractical threat that would harm Ontario and Quebec.

She warns that pursuing an energy embargo would lead to a national unity… pic.twitter.com/Q8qynjZ4lo

— Juno News (@junonewscom) January 13, 2025

Canada already vowed to impose tariffs on C$155 billion worth of U.S. imports, including C$125 billion in three weeks time. 

Meanwhile, U.S. President Donald Trump imposed a 10% border levy on Canadian crude over failures to address concerns at the southern border.

Alberta, Canada's main energy-exporting province, says it would never accept the idea of reducing energy exports to the United States, nor impose export tariffs on its top resource. 

Given the U.S. need for Canadian energy, analysts say the tariffs are not likely to change import and export patterns much.

Poilievre discusses Trump's tariff threats and the future of Canadian energy exports:

"Because of fanatical and stupid environmental extremists in the Liberal government...we are forced to sell almost all of our energy exports to the Americans." pic.twitter.com/ih3eFYx0Lk

— Rebel News (@RebelNewsOnline) January 9, 2025

Richard Masson, executive fellow at the University of Calgary School of Public Policy, expects the border levy to add $6 to the price of a barrel of oil.

“The oil we send is getting to the U.S. because they want it and they need it,” Masson told the Epoch Times. “The higher price is not going to change that.”

“We don’t have lots of other places to sell it. They don’t have any alternative sources of supply,” he added, referring to Alberta’s heavier crude from the oilsands.

The U.S. received 97% of Canadian crude oil exports in 2023, with 87% coming from Alberta. Roughly half of those exports go to refineries on the Gulf Coast. 

Canada exports roughly 4 million barrels of oil daily to its ally, though Keystone XL would have carried an additional 830,000 barrels to those refineries for international shipping, if built to completion.

Premier @ABDanielleSmith on Fox Business discussing the restart of KXL, the mutually beneficial relationship between Alberta and the USA, and her trip to Trump's inauguration. pic.twitter.com/Gkpwqrbmkp

— Sheila Gunn Reid (@SheilaGunnReid) December 4, 2024

Alberta Premier Danielle Smith, an oil and gas advocate, expressed optimism in its revival last December. “Hopefully we can find a mutually satisfactory way forward,” she told Fox Business.

Following Tuesday’s tariff announcement, however, she felt “betrayed” by the Trump administration, who she lobbied for months to avoid an “unjustified” trade war.

“These tariffs will hurt the American people, driving up costs for fuel, food, vehicles, housing, and many other products,” she said in a statement to social media.

“We benefit from more oil production. America benefits from more oil production.”

The Trudeau Liberals are open to reviving Keystone XL, but not until the U.S. drops all tariff talk.https://t.co/EsKoyexxJt

— Rebel News (@RebelNewsOnline) March 3, 2025

The Trudeau Liberals earlier expressed an openness to reviving the pipeline, but not until after the trade war ends.

“At the end of the day, there may be a conversation about KXL, but it can’t be until the Americans actually decide that they’re going to down tools with respect to tariffs,” Natural Resources Minister Jonathan Wilkinson told the Financial Post.

U.S. President Donald Trump earlier called for its revival, though Wilkinson says the remarks are “difficult to understand” given the tariff on Canadian energy.

The price of Western Canadian Select oil flirted around US$53.96 on Thursday afternoon, falling nearly US$2 a barrel since Tuesday.

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