The threat of 25% tariffs on Canadian exports, including oil and natural gas, proposed by President-elect Donald Trump, poses a grave risk to Alberta’s economy. With Canadian crude oil facing the possibility of being sold at discounted prices in the U.S. market, Premier Danielle Smith of Alberta, accompanied by entrepreneur Kevin O’Reilly visited Trump at Mar-a-Lago in an attempt to secure an exemption for the province’s energy exports. While Smith described the meeting as constructive, there was no indication that energy would be excluded from the tariff list. Smith’s comments reflect her deep concern that Alberta, as Canada’s energy heartland, might face long-term economic consequences, including provincial deficits if these tariffs are enacted.
Mélanie Joly, Canada’s foreign affairs minister, was quick to respond to a reporter’s question on CTV’s Question Period, when asked if Canada would consider retaliating against the U.S. in response to the tariffs. Joly stated that "everything is on the table," signaling potential measures like surtaxes on U.S. goods should Trump follow through with his tariff threats. However, Joly refrained from offering further specifics, underscoring the gravity of the situation. Premier Smith, on the other hand, suggested that an export ban on Alberta oil to the U.S. could lead to a national unity crisis, which would only heighten the already tense relationship between the provinces and the federal government. At a time when Canada faces such a pivotal international challenge, the need for a unified response is crucial—actions that threaten national unity can only serve to undermine the country’s collective strength in negotiating these disputes.
This situation calls for a closer examination of historical precedents in energy diplomacy and the broader implications of these tariffs, particularly considering U.S. policy toward Canadian oil.
President Trump’s rhetoric about Canada and its energy resources is rooted in a long history of U.S. interest in Canadian oil, with figures such as J. Howard Pew playing a central role. Pew, a prominent businessman, was instrumental in the creation of the Great Canadian Oil Sands Company (now Suncor) in 1963, recognizing Canada’s oil reserves as a strategic resource for North America. Pew’s investment was partly motivated by a desire to reduce American dependence on foreign oil. At the time, Canada was almost viewed as an extension of U.S. territory in terms of energy security.
However, U.S. interest in Canadian oil has often been driven by political and economic considerations, as evidenced by U.S. Vice President Dick Cheney’s comments in the early 2000s. Cheney’s 2001 “National Energy Policy” emphasized the importance of Canadian oil to the U.S., reflecting its growing significance within North America’s energy strategy. Despite its vast resources, Canada’s energy sector has remained heavily reliant on U.S. markets, with approximately 97% of Canada’s crude oil exports going to the U.S. in 2023, highlighting the longstanding bilateral dependency between the two countries.
This dependency has often sparked tension, particularly when foreign investments in Alberta’s oil sands are concerned. A notable example occurred in 2005, when a Chinese company’s investment in the oil sands was met with criticism from U.S. politicians, reflecting the belief that Canadian energy resources were, in a sense, part of the United States’ sphere of influence. This sentiment was bluntly articulated by energy analyst Irving Mintzer, who stated, “The problem with the Chinese is that they don’t know that Canadian oil is ours. And neither do the Canadians.”
I am reminded of a conversation I had with the late Peter Lougheed, Premier of Alberta, who shared with me an insightful exchange he had with U.S. Vice President Dick Cheney. Lougheed recounted how Cheney had expressed opposition to Canadian oil exports to China, emphasizing that the U.S. viewed Alberta's oil as a strategic commodity. Lougheed, who understood the oil business intimately, responded that having two customers, rather than just one, would allow Alberta to secure better prices for its oil. This exchange underscores the complex dynamic in which U.S. policy often seeks to limit the diversification of Canadian energy markets, preferring Canada to remain a reliable, North American supplier rather than seeking global market opportunities. Lougheed's perspective remains relevant today, highlighting the geopolitical calculations that continue to shape energy policy and relations between the two countries.
The U.S. has long viewed the steady flow of Canadian oil as essential to its energy strategy, with Canada now being the primary supplier of U.S. crude oil, surpassing even OPEC nations. Beyond oil, Canada is also a vital source of natural gas, electricity, and critical minerals such as uranium, which are indispensable to U.S. industry and energy generation.
As the U.S. pivots toward energy self-sufficiency, the U.S.-Canada energy relationship is entering a transformative phase, with the development of the Alberta oil sands playing a key role in this shift. U.S. policymakers are closely considering how to integrate Canada’s energy resources into a broader North American energy and economic security plan.
The recent meeting between Smith, and O’Reilly raises questions about their capacity to navigate the complex web of economic, political, and historical factors at play in U.S.-Canada energy relations. Alberta’s oil and gas industry is not just an economic engine; it is a crucial part of the geopolitical equation. Smith’s statement about a potential export ban on oil, while an understandable response to the pressure, could have far-reaching consequences—not just for Alberta but for Canada’s unity as a nation.
Moreover, the historical context behind U.S. interest in Canadian oil underscores the broader geopolitical dynamics at play. These tariff proposals are not isolated incidents but part of a longer history of U.S. efforts to secure Canadian energy resources, sometimes through diplomacy and other times through economic measures.
Looking ahead, Smith and her allies must carefully consider whether these actions will benefit Alberta in the long term. While Trump’s presidency may last only four years, the long-term energy relationship between the U.S. and Canada will likely persist beyond any single administration. Alberta must balance the immediate economic interests of the province with the broader strategy of ensuring its place within Canada’s energy future and North America’s economic integration.
In conclusion, the tariff proposal is not merely an economic issue but reflects deeper historical, political, and strategic forces that have shaped U.S.-Canada energy relations. Smith, and O'Reilly’s efforts to navigate this complex issue will require more than just diplomacy—it will demand a clear understanding of the past, a commitment to national unity, and a vision for Alberta’s role in North American energy security.
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