Trump’s Energy Secretary says Canadian oil and gas could be excluded from U.S. tariffs
The United States could remove its tariffs on Canadian oil and gas, the U.S. Energy Secretary said on Monday, opening the door to the possibility of returning to free energy trade between the two countries.
Chris Wright told reporters at a global energy conference in Houston that there are active discussions within President Donald Trump’s administration and with trading partners about the tariff issue, which has fractured relations between the U.S. and Canada.
Asked if there is a possibility of an agreement that would eliminate energy tariffs, Mr. Wright said, “that latter scenario is certainly possible. So, too early to say, but I would say active dialogue within the administration, and with the administration in Canada and Mexico and all of our trade partners.”
Canada is by far the largest foreign energy supplier to the U.S., shipping more than 4.3 million barrels a day of oil. Numerous refineries, especially in the Midwestern states, are tooled to process the thick crude grades from Alberta’s oil sands. Analysts have warned U.S. motorists will face higher pump prices as a result of anti-trade measures.
Last week, the Trump administration moved forward with a 25-per-cent tariff on most imports from Canada, and a 10-per-cent tariff on energy. But within days, Mr. Trump paused the duties
on products that are covered by the U.S.-Mexico-Canada Agreement on trade until at least April 2.
Several Canadian government and industry officials have flocked to the CERAWeek event to seek clarity on the President’s tariff threats, and to meet with their counterparts from the U.S. and elsewhere in hopes of reaching agreements to limit economic damage.
Alberta Premier Danielle Smith made the trip to hammer home the message that her province’s oil and gas exports are key to North American energy security. She spoke of the urgency of expanding access to other markets, including those in Europe and Asia, to reduce reliance on the U.S. if the tariff threat remains. That would require building new pipelines.
She said she believes U.S. producers and refiners were successful in persuading Mr. Trump to, at the least, impose the smaller tariff on Canadian energy, given the highly integrated nature of the two markets.
“I think there are a lot of value-added products that the Americans make because they have access to a discounted energy resource, in particular our oil and gas,” Ms. Smith said. “So I’ll be making that case here. I think we should have a zero tariff on this critical resource, and I hope that that persists once we get to April 2 and see what the reciprocal tariffs mean.”
After the pause, there is considerable uncertainty about which Canadian energy products are compliant under that agreement. Mr. Wright declined to offer details, and Ms. Smith said she and her officials are studying the issue.
Several companies have not filed paperwork with details of their compliance, because they have long enjoyed a free-trade relationship, the Premier said. But that could change now that there are two prices in the market – one with a 10-per-cent tariff added, and one without. There is also question about the mix of light hydrocarbons known as diluent that is blended with oil sands crude so it can flow in pipelines, she said.
According to a report from Capital Economics, 60 per cent of that diluent must be sourced within USMCA countries to be compliant.
“If the Americans are interested in making sure that foreign entities are not dumping into the Alberta market as a way of getting access into the U.S., I can assure you that’s not happening,” Ms. Smith said.
Mr. Wright, a former fracking executive and a staunch oil and gas advocate who is harshly critical of former president Joe Biden’s climate-focused energy policies, said tariffs and their trade-offs are a topic of “vigorous debate” within the Trump administration.
“What is the ultimate outcome going to be? We don’t know for sure. But it’s definitely not a quasi-religious dogmatic thing. It is a dialogue about what’s the best way to benefit the American people,” he said.
This article was first reported by The Globe and Mail
