Why Trump and Carney Haven’t Touched Energy in Their Tariff War

In an ongoing energy trade war between the United States and Canada, both nations have imposed tariffs and threats on each other, yet they have refrained from targeting oil and gas. This is primarily due to their significant reliance on each other's fossil fuel industries, making full independence an impractical goal. Canada is the top international supplier of petroleum to the United States, providing half of its foreign petroleum imports.

Moreover, Canada offers electricity to the United States through numerous transmission lines, including the longest line connecting Canada to New York City, which was recently completed. The energy sector in the United States is also dependent on Canadian fossil fuels. This interdependence is evident in political disputes, where both countries impose tariffs on each other's imports without affecting the oil, gas, and electricity sectors.

This integration stems from decades of constructing a highly interconnected energy network. While Canadian oil and electricity are heavily exported to the United States, accounting for 84 percent and 76 percent of Canada's energy exports, respectively, the United States remains the primary consumer of Canada's energy products. This dependency poses challenges for Canadian producers, especially as the United States increases its oil imports from Venezuela.

Despite these challenges, both nations continue to strengthen their energy ties by pursuing new trade agreements.