U.S. President-elect Donald Trump’s promise to slap a tariff of at least 10% on all imports to the United States is unlikely to apply to Canadian oil, energy experts predict, amid growing speculation about his energy policy plans after Republicans secured control of the United States Senate and House.

As Trump builds his new energy-focused administration, experts say it could open opportunities for Canada to expand the two countries’ long-standing partnership, reports The Canadian Press.

“I think the U.S. will need more Canadian energy regardless of what they do themselves,” said Heather Exner-Pirot, a special advisor on energy to the Business Council of Canada.

‘Delayed Transition’ Likely

Trump and the Republicans assuming control has many implications for the U.S. energy and natural resources sectors, says energy analytics firm Wood Mackenzie. “A pathway nearer to our new delayed transition scenario is now more likely.”

Analysts expect that U.S. progress to transition to a net-zero economy will backtrack. Domestically, bipartisan support for the Inflation Reduction Act means the landmark climate legislation will not be wholly repealed, but tax credits for expanding renewable energy development will probably be rolled back. This means Trump’s energy policies could reduce renewables deployment by about a third.

Trump’s plans will take form while oil demand is expected to drop, and an anticipated increase in U.S. oil supply is forecast to saturate the market, according to the International Energy Agency. Paul Sankey, an oil analyst with Sankey Research, says that the U.S. government’s calls to “drill, baby, drill” are unfounded, as oil companies are more likely to respond to market trends and many companies are hesitant to expand. Sankey adds that any efforts to increase demand in the U.S. or Europe are likely to be offset by lowering demand from China.

But Trump’s intention to broadly apply tariffs on imports still has implications for energy transition goals in other countries. According to Wood Mackenzie, the tariffs could dampen U.S. and global economic growth, which would lead to lowering demand for oil. That poses a risk to the refining industry, but the tariff protections might outweigh that risk and result in domestic refiners outperforming.

However, the tariffs would likely create problems for energy markets north of the border if they are applied to one of the U.S.’s most important trading partners—Canada.

Experts Doubt Tariffs Will Apply to Canadian Oil

The Canadian Press writes that the tariff threat is causing concern in Canada, where the Canadian Chamber of Commerce said it could take a $30-billion bite out of the Canadian economy.

Rory Johnston, a Toronto-based oil market researcher and founder of Commodity Context, said he believes there’s a very small probability that Trump’s fees would apply to Canadian oil, but it is “quite a potentially damaging one.”

“Canada is uniquely vulnerable to market pressure posed by U.S. refineries given our lack of alternative egress,” Johnston said.

Michael Catanzaro, a former Trump energy adviser, told a forum in Washington, D.C., last week that he doesn’t think Trump’s campaign vision of energy dominance and lower energy costs will exclude Canada.

“We should double down on the fact that the U.S. and Canada together can be this powerful force,” he said at the North American Energy Preeminence Forum hosted by the right-leaning Hudson Institute in Washington in early November.

More than 77% of Canadian exports go to the U.S. and trade comprises 60% of Canada’s gross domestic product. A significant proportion of that comes from oil and gas.

Canada is also the largest source of U.S. energy imports, and almost all Canadian crude oil exports went to its neighbour in 2023. Most of that makes its way through pipelines to the Midwest, where the key battleground states flipped for Trump on promises of making life more affordable.

Without exemptions for Canadian crude, many experts agree that the cost at American pumps is certain to increase. It’s unlikely the Republican leader would take action that’ll make gas cost more, Johnston said.

He added there could be a situation where Canada sees a boon from Trump’s tariffs. If the Republican leader puts those fees on all oil imports except Canada “that is actually a net good thing for Canadian exports.”

Tensions With Trudeau Complicate Energy Trade

But all of this comes with the caveat that there’s been a rocky relationship between Prime Minister Justin Trudeau and Trump, and the Liberal government in Canada has been at odds with the Republican politically on a number of fronts including climate action and renewable energy.

Fen Hampson, a professor of international affairs at Carleton University in Ottawa and co-chair of the Expert Group on Canada-U.S. Relations, said he’s not certain the Republican leader would be willing to give a tariff concession under Trudeau.

Hampson said Trump would know that giving Canada an immediate exemption would provide Trudeau a powerful argument about his ability to negotiate with the president-elect ahead of Canada’s looming election. The Republican leader would not be happy with that outcome, given their notably rocky relationship during Trump’s first administration, Hampson added.

Trump called Trudeau “weak” and “dishonest” after the prime minister criticized the president’s 2018 tariff actions at the G7 summit in Quebec. There was another blow-up when Trudeau and other NATO leaders appeared to be on video talking about a Trump press conference the following year. Trump called the prime minister “two-faced.”

Still, Trump’s recent announcement to create a National Energy Council to establish U.S. “energy dominance” around the world could offer opportunities for Canada, and has been warmly received by Alberta Premier Danielle Smith.

“If I were any western Canadian premier, I would probably be quite happy … and anticipating great possibilities for trade and co-operation,” said Eric Miller, president of Rideau Potomac Strategy Group, a cross-border consultancy focused on trade, supply chains and government affairs.

Earlier this year, Alberta became the first non-U.S. jurisdiction member of the Governors’ Coalition for Energy Security—an energy pact among a dozen American states that “aims to shore up energy security, lower energy costs, increase reliability and bolster sustainable economic development,” the Globe and Mail reported. The move was “the province’s first step in positioning itself in preparation for a Donald Trump administration in the new year.”

At the same time, the Canada-U.S.-Mexico Agreement, negotiated under the first Trump administration, will come under review in 2026. Hampson said Trump could use the tariffs, or a threat of them, to force Canada into concessions.

Wilbur Ross, the former U.S. commerce secretary who was involved in the negotiation of that trilateral agreement, recently told CBC News that Trump is likely to carve out exemptions for sectors such as Canadian oil and gas.

Miller said politicians run for office in poetry and govern in prose, agreeing that wide-reaching tariffs on Canadian energy were unlikely.