Canada’s Energy Sector Hit with Tariffs on Oil and Gas Imports
After weeks of uncertainty, Canada’s energy sector received the news it had been fearing — the U.S. will soon start imposing tariffs on Canadian oil and gas imports.
On Friday, President Donald Trump said he would probably set tariffs on Canadian oil and gas at 10 per cent. While that’s less than originally feared, people who work in Canada’s energy industry say it’s still significant and will have an impact on both sides of the border.
Experts Weigh In
Experts say that despite the tariffs, Americans still need Canada’s oil and gas because nearly two-thirds of U.S. oil imports come from north of the border and many of the refineries in the U.S. midwest are designed specifically to process heavy Canadian crude.
"Those refineries are very dependent upon Canadian crude. So, 4 million barrels a day — it’s about one in four barrels that are used by U.S. consumers as gasoline and diesel. So, you know, the refineries will have to jack up prices," said Richard Masson, professor of public policy at the University of Calgary.
Consequences of Tariffs
However, higher prices, in turn, are also expected to lead to less demand. "This will have a huge blow to the Canadian economy," said Gurpreet Lail, CEO of Enserva. "The tariffs will put tens of thousands of jobs at risk."
Potential Risks to Canada
The Canadian Association of Petroleum Producers warns that a trade dispute with the U.S. could also put other parts of Canada at risk, particularly Ontario and Quebec that depend on the U.S. for imports of crude oil, natural gas, and other refined petroleum products, and there are no immediate alternative sources available.
CAPP warns in a statement that "this dependence poses a risk that Canadian retaliatory measures, such as export restrictions on US exports, could also lead to similar actions from the United States, resulting in energy shortages and higher prices for Canadians."
Conclusion
The tariffs on Canadian oil and gas imports are expected to have significant consequences for both Canada’s energy sector and the Canadian economy. As the situation continues to unfold, it remains to be seen how Canada will respond to these tariffs and what the long-term impact will be on the energy sector and the country as a whole.
Frequently Asked Questions
- What are the tariffs on Canadian oil and gas imports?
The U.S. will impose a 10 per cent tariff on Canadian oil and gas imports. - How will this impact Canada’s energy sector?
The tariffs are expected to have a significant impact on Canada’s energy sector, leading to higher prices and reduced demand. - What are the potential risks to Canada?
The tariffs could lead to energy shortages and higher prices for Canadians, and also put other parts of Canada at risk, particularly Ontario and Quebec. - How will Canada respond to the tariffs?
The Canadian Association of Petroleum Producers warns that Canada needs to be cautious in its response to avoid escalating the trade dispute and causing further economic harm.