The US-Canada trade war has moved from threat to reality. Canada has enacted retaliatory tariffs on billions of dollars of American goods, matching the 50% tariffs the US placed on a range of Canadian goods back in August, and steel and aluminum duties have escalated sharply on both sides. For businesses on either side of the border, it’s a legitimate moment to ask what the US-Canada trade war means for energy costs.
Why Oil and Gas Are Exempt From the Tariffs
Both countries have kept oil and gas outside the tariff fight. That’s not a small carve-out: the US remains the largest buyer of Canadian crude by a wide margin, largely because American refineries, particularly along the Gulf Coast, are built specifically to process the heavy crude that Canadian wells produce. Replacing that supply chain isn’t something either side can do quickly, which is a big part of why energy has stayed out of the dispute so far.
Electricity Exports: A Separate, Less Certain Risk
The tariff exemption applies most clearly to oil and gas. Electricity sits in a different position. Ontario’s premier has publicly said Canada should be prepared to cut off electricity exports to the US if the trade war worsens, and Ontario currently supplies power to several US states, including New York, Michigan, and Minnesota. That’s not a tariff; it’s a potential policy decision, and it specifically touches electricity rather than oil and gas.
What the Trade War Means for Your Energy Risk
If your business’s energy exposure is primarily oil or natural gas, the direct tariff risk looks limited for now. Both countries have strong incentives to keep that exemption in place. If you have meaningful cross-border electricity exposure, particularly anything connected to Ontario supply into affected US states, that’s a genuinely different risk profile worth tracking, separate from the tariff conversation entirely.
The short version: “exempt from tariffs” is accurate, but it isn’t the whole story. Knowing which category your business’s actual energy exposure falls into is worth a few minutes, especially while this situation is still moving.
