Tariff War Sidelines Oil and Gas: Why Trump and Carney Left Energy Alone

Half of all foreign petroleum entering the United States comes from Canada, and that single number explains why the tariff war between Washington and Ottawa has never touched a barrel of it.

President Donald Trump imposed 50 percent tariffs on a wide range of Canadian imports in July. Canada reciprocated in kind on American goods. Oil, natural gas, electricity and some petroleum products were exempted from both measures. The exemptions were not an oversight. They were an admission.

The two energy systems, built over decades, function as one continental network. Pipelines, refineries, gas systems, grids and fuel-distribution networks cross the border in both directions. As Energy Now put it in a recent headline: "the facts, and his own policies, say otherwise" when Trump talks of cutting Canada out. The report adds: "Pipelines, refineries, natural gas systems, electricity grids and fuel-distribution networks do not stop functioning simply because a politician declares that one country no longer needs the other."

The takeaway: the exemptions are the policy, not the exception.

How big is the dependency, in numbers?

The figures run in one direction first. Canada is the single largest international supplier of petroleum to the United States, accounting for half of all foreign petroleum imports. More than 30 major electricity transmission points link the two grids. Canada is the only foreign country that supplies electricity directly to the United States.

The Northeast depends heavily on Canadian hydropower. The longest transmission line, carrying Canadian hydro directly into New York City, was completed in June.

The dependency also runs the other way. The Conversation reported that "over the past 50 years Canada has expanded its energy production with one specific goal: serving U.S. consumption." In 2024, 84 percent of Canadian oil and 76 percent of its electricity went to US buyers. The report's verdict is blunt: "Without American buyers, there is no real energy market in Canada."

Put plainly: Canada has one customer, and that customer knows it.

What is Venezuela's role in the squeeze?

Gulf Coast refineries are importing more Venezuelan crude. The shift follows the Trump administration's move in January to oust and arrest Venezuelan President Nicolas Maduro and aggressive efforts to revive the country's oil industry for American interests.

Venezuelan crude is more expensive than Canadian barrels. Venezuela's infrastructure also remains in disarray. Yet the increased flow is already raising costs for Canadian oil producers, according to the report, by Haley Zaremba for Oilprice.com.

That is the quiet pressure point in this story. Washington does not need to tariff Canadian crude to squeeze it. A second supplier at the Gulf Coast does part of the work.

Can Turkey replace the American buyer?

Prime Minister Mark Carney is trying to widen the customer list. He is in Ankara forging energy and defense deals with Turkish President Recep Tayyip Erdogan. The centerpiece is a plan to ramp up Canadian liquefied natural gas exports to Turkey, a major global economy and a potentially lucrative partner.

The arithmetic remains hostile to the idea. Venezuela is not Canada, and Turkey is not the United States. The new deals cannot make a noticeable dent in trade between the two North American neighbors, the report concludes.

The Conversation frames the standoff the same way: "The current reality on the ground shows an integrated energy system between the two nations: something very difficult and costly to untangle, and a process that would take decades to reengineer."

What is the watch item?

The status quo holds. Tariffs continue on other goods; energy stays exempt; both leaders posture while the barrels and electrons keep moving. The variables worth tracking are three.

• Whether Gulf Coast refiners sustain Venezuelan imports at volumes that widen the Canadian discount.
• Whether the Ankara LNG framework produces firm offtake or stays a memorandum.
• Whether any future tariff round drops the energy exemptions that currently keep the continental system whole.

For now, the rhetoric is hot and the pipelines are calm. That combination has been the entire story.