The United States and Canada have engaged in a heated trade dispute, yet oil and gas have remained untouched by the tariffs and threats exchanged between the two nations. This is due to their mutual reliance on each other's energy infrastructure, which makes complete separation impractical. Canada supplies half of the US's foreign oil imports, and the two countries share over 30 major electricity transmission lines, with Canadian hydropower feeding directly into New York City. The Northeast US heavily depends on Canadian hydro for grid stability, while the broader energy sector remains reliant on Canadian fossil fuels.
Despite Trump's rhetoric about severing ties, the reality is that their energy systems are deeply integrated. In July, Trump imposed 50% tariffs on Canadian goods, but oil, gas, and electricity were excluded. This reflects the economic interdependence that persists despite political friction. Canadian energy production has been tailored to meet US demand for decades, with 84% of Canada's oil and 76% of its electricity exported to the US in 2024. Without American buyers, Canada's energy market would collapse, leaving producers in a precarious position as US imports from Venezuela rise.
Venezuela's crude, though more expensive and less reliable, is gaining traction as US refineries seek alternatives. Canada is trying to diversify its export markets, such as through deals with Turkey, but these efforts are unlikely to replace the US as a major buyer. The Conversation notes that the current energy landscape is a complex, decades-old network that is costly and time-consuming to reconfigure. As Carney and Trump continue their political rivalry, the energy relationship remains largely unchanged, with both nations locked in a mutually beneficial but politically tense partnership.