Why U.S. Tariffs on Canadian Energy Will Hurt Both Sides of the Border

Why U.S.  Tariffs on Canadian  Energy Will Hurt Both Sides of the  Border
More than 450,000  kilometers of pipelines  connect Canada and the  United States, enough to circle the Earth 11  times.

Marathon  Petroleum's Detroit refinery in the  Midwest U.S., the largest processing area for Canadian crude  oil imports.
As U.S. imports of  barrels of Canadian oil  hit a new  record, leaders on both sides of the border are warning of the threat to energy security  if the incoming Trump administration  implements tariffs on Canadian oil and  gas.
"We hope  that future tariffs  will exclude these critical  raw materials and refined products," Chet Thompson, CEO of the American Fuel and Petrochemical  Producers (AFPM), told Politico's EandE  News.
AFPM members  produce everything from gasoline to  plastics and dominate an industry that includes about 500 refineries and petrochemical plants  operating in the United  States.
"U.S. refiners depend on crude oil from Canada and Mexico to produce the  affordable and reliable fuels  that consumers count on every day," Thompson  said. The United States is now the world's largest oil producer, but  it still needs significant imports  — more than six million barrels per day  in January, according to the U.S. Energy Information Administration  (EIA).
Nearly 70  percent of that oil  comes from  Canada.
Many U.S. refineries are  designed to process "heavy"  crude, such as that produced in  U.S. reservoirs.
"New tariffs on [Canadian]  crude, natural gas, refined products, or critical  raw materials that cannot be sourced  domestically ... would have a direct impact on energy  access and availability for consumers," the American Petroleum Institute, the industry's largest trade association, wrote in a recent letter to the  U.S. Trade  Representative.
More than 450,000  kilometers of oil and gas pipelines  connect Canada and the United  States, enough to circle the Earth 11  times. The scale of this  vast interconnected energy system  is unmatched anywhere else. It's "a powerful card to play" in  an increasingly  volatile era, researchers  at SandP Global said last  year.
In 25 years, the United States will import  about the same amount of oil as it does today (7.0 million barrels per day in 2050  versus 6.98 million barrels per day in 2023), according to the latest  EIA projections.
"We are  energy interdependent." "If the Americans  cut off Canadian  energy, it would be like cutting off their own arm," said Heather Exner-Pirot, a special advisor  at the Business Council of  Canada. Trump's threat to  impose a  25% tariff on imports from Canada, including energy,  "would lead to lower production in Canada and higher gasoline and energy costs  for American  consumers, while threatening  U.S. energy security,"  Lisa Baiton, CEO of the Canadian Association of Petroleum  Producers, said in a  statement.
"We must do everything in our power to protect and preserve this energy partnership."
Energy products are Canada's largest export to the United States, accounting for about a third of total Canadian exports to the  United States, energy analysts Rory Johnston and Joe Calnan noted in a November report for the Canadian  Institute for Global  Affairs.
The impact of tariffs  on Canadian oil  is likely  to be  felt in both Canada and the United States, they wrote: higher pump prices for  American consumers, weaker  activity for  American producers, and reduced returns for Canadian  producers.
"It is  critically important for Canada to  emphasize that it is not just another  trading partner, but rather an indispensable part of the  U.S. economic and security  apparatus," Johnston and Calnan wrote.

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