Energy industry on both sides of border pushes back on tariffs: ‘Too many jobs on the line’

While United States President Donald Trump continues to talk about tariffs on Canadian exports, his plans are being criticized by some industry groups in both the United States and Canada who say changing the status quo will hurt everyone involved.

“Both of our economies, particularly when it comes to energy, are highly integrated and highly efficient,” said Mark Scholz, the president and CEO of the Canadian Association of Energy Contractors (CAOEC).

He explained trade over the past 50 years or so has created wealth and prosperity for both Canada and the United States and any export tariffs, taxes, or bans on either side of the border would hurt both nations.

“This is too important of a trade relationship, too many jobs are on the line both in Canada, the United States to take this for granted.”

This week, Trump renewed his pledge to include Canada under incoming 25 per cent tariffs — which is a tax put on goods or services coming from another country — possibly as early as Feb. 1.

Trump has also repeatedly has said the U.S. does not need Canadian oil, lumber or vehicle manufacturing.

However, one oil group in the U.S. now says tariffs would be detrimental to their industry.

The American Petroleum Institute sent a letter this week to officials at the Office of the U.S. Trade Representative (USTR).

In it, the national trade association called for crude oil and natural gas to be exempt from proposed tariffs.

“The U.S. has a global advantage in oil and gas production and refining/manufacturing and is poised to expand this leadership. Tariffs on crude oil, natural gas, or refined products would directly undermine energy affordability and availability for consumers while eroding the U.S. oil and natural gas industry’s competitiveness both domestically and globally,” the letter to the USTR said.

“Oil and natural gas markets are global, with interlinkages and trade back and forth across international borders along the value chain. Furthermore, critical supply chain inputs (vital to extraction, processing, and refining) cannot be sourced domestically in adequate quantities or to the required specifications, heightening these risks.”

The U.S. lumber coalition, on the other hand, supports the Trump’s stance, saying existing trade agreements with Canada are unfair. It says since production by U.S. mills has expanded so far they’d be able to offset a drop in Canadian imports.

The Canadian Association of Energy Contractors says it’s too early to tell what tariffs could look like for Canada’s economy.

However Scholz says Canada is at a disadvantage because of how much we rely on the States to buy our product.

“If we don’t take this as a wake-up call, Canada is in big trouble,” Scholz said.

“We have basically a single customer for oil and gas — that’s the United States.”

About 95 to 97 per cent of Canada’s oil is shipped south of the border, making up about 60 per cent of U.S. crude oil imports. That means nearly a quarter of the oil America consumes every day comes from north of the border.

Experts have said that Canada’s trade imbalance with the U.S. largely stems from Canada’s energy exports.

“The reason why we’re in this dilemma today and the reason why we have so limited optionality with the prospect of tariffs is because we don’t have very good market diversification. This is something that Canada needs to focus on,” Scholz said.

He added there are three main barriers stopping Canada from selling to other markets via the construction of new infrastructure such as pipelines to tidewater.

“The Impact Assessment Act that was introduced the five years ago by the Liberal government. We have the emission cap right now that’s going to basically reduce the opportunity for increasing our production of energy in Canada. And we have things like the anti-greenwashing legislation that’s limiting our ability to communicate the important role that our industry plays within environmental performance,” he said.

Scholz said if Canada wants to avoid further situations like the one it finds itself in now with Trump’s tariffs, barriers like that need to be removed.

McGill University professor Amy Janzwood is an expert in the politics of energy and the environment, and has studied the now-defunct Northern Gateway pipeline at length. On Thursday, she told Global News in the past decade, the economics and landscape for such projects has changed dramatically.

That means Canada’s major energy and pipeline companies are not interested in building new pipelines due to commercial and regulatory challenges, she said.

“The number of hurdles to cross when building massive new pipeline infrastructure like this is quite significant,” she explained, citing the regulatory process, environmental approvals, land acquisition and public support.

“There are a whole host of challenges to building new energy infrastructure.”

Trump doubled down Friday on his comments in a trip to North Carolina.

On Friday, Trump again said that Canada should become an American state, adding, “It’s sort of crazy” to suggest the U.S. needs Canadian imports.

Trump said he told Trudeau earlier that the U.S. is subsidizing Canada to the tune of billions of dollars, and claimed Trudeau said that if those subsidies stopped, Canada would be “a failed nation.”

The president insisted Canada would have “better health coverage” and “wouldn’t have to worry about military” as an American state, adding that Canada has been “very nasty to us on trade.”

— with files from The Canadian Press

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