Can Canada actually stop oil flow in the US in response to Trump Tariff? , Business and economy news

US President Donald Trump has postponed a major trade war between the United States and Canada after agreeing to impose a 25 percent tariff for 30 days. But anger has erupted in Canada, in which people are calling to boycott American products, and some have called to stop oil exports to the southern neighbor of the country.

However, blocking the flow of crude oil in the US can increase a heavy economic cost on Canada, which pumps all its crude oil in the US through a network of pipelines.

In addition, Canada will take some time to diversify its exports following decades of trade relations by Cement by North American Free Trade Agreement (NAFTA), which Trump again by Trump during his first term during his first term in the office in office from 2017 to 2021 Organized.

Therefore, in principle, Canada can prevent oil flow in the US because Trump has to benefit to return to tariff hazards. But by doing this, the raw supply to the refineries in the east of Canada will be disrupted as pipelines have to pass through the US region.

How does Canada’s oil pipeline work?

The main warning is how the Canadian pipeline infrastructure is placed. It begins in western Canada, where most oils are produced, but have to pass through the US to reach the eastern part of Canada.

Most of the oil is manufactured in the Western Canada sedimentary basin (WCSB), including the province of British Columbia, Alberta, Suskechewan and Manitoba.

Crude oil is transported through pipelines passing through the US to reach the eastern coast provinces of Canada, including Ontario and Cubek, where it is refined. So the network of pipelines, some of which was built in the 1950s, serve both refineries in the US and Canada.

“Canada and the US took a conscious decision to integrate their energy infrastructure,” said Gitane de Silva, former CEO of the Government Agency Canada Energy Regulator (CER). “This is really like this for a long time.”

In 1994, the US, Canada and Mexico signed the NAFTA deal, which removed most of the tariffs between the three countries and included provisions on energy cooperation.

“When the agreement was confirmed, there was a desire for Canada to export as much energy in the US,” D. Silva said. The United States-Maxico-Canada Agreement (USMCA), which replaced NAFTA under Trump in 2020, maintains most of the provisions of NAFTA about energy.

Geography also plays a role how pipelines are produced.

“Geology and Geography is a little challenging due to continental shield and great lakes to manufacture pipelines from Alberta to Ontario and Cubek,” said D. Silva. Continental shield is a region of the old and hard prequirian rock that creates a mass of land to about half of Canada.

Canadian oil flows into parts of America, such as midwests, where some refineries are located. Some refineries in the US are close to Canadian oil sites compared to eastern provinces. For example, the British Columbia oil field is close to California in the US compared to the Canadian province of Ontario.

How much oil does Canada send to America?

According to CER, almost all crude oil exports of Canada – about 97 percent – were exported to the US in 2023.

In 2022, according to the US Energy Information Administration, 60 percent of US oil imports were from Canada.

According to Canadian Association of Petroleum Producers, in 2024, Canada produced 5.7 million barrels of oil per day. About 4.3 million barrels of barrel petroleum products were exported to the US per day.

Can Canada stop sending crude oil to America?

Theoretically yes, but this is unlikely, experts say.

The federal government, in principle, has the right to prevent exports. But D Silva said it would be complicated, as Canada is a confederation, meaning that the federal government and the province share power. Oil production belongs to the provincial power.

“There are definitely legal questions, because Canada had never done before,” D Silva said to Al Jazira, saying that disagreement can cause “domestic constitutional crisis”.

D Silva said that it is also a question as to where the oil will be stored after closing the tap. “When the pipeline is filled, it will be very difficult to find a place for an additional 4 million barrels in a day.”

D. Silva said that if the Canadian government decides to cut oil supply to the US, then there would be a question on how to get their oil to the eastern parts of Canada – Ontario, Quebec and New Breanswick -. This raises the question about whether the US in turn prevents the flow of oil, which flows from the US region to the eastern Canada.

According to an agreement by US-Canada Transit pipelines of 1977, no public authority in the US or Canada will issue measures, which aims to, or which will have an impact, obstruction, diverting, redirecting or any way, any way With the broadcast of transmission from. Hydrocarbon in transit “.

While the violations of the treaty can be challenged in court, “With the Trump administration, I don’t know if they are focused on those international treaties”, D. Silva said.

Last month, speaking at the World Economic Forum in Davos, Switzerland, Trump said, “We do not need him (Canada’s) oil and gas. We have more than anyone. “They have vowed to drill more oil to make up for possible Canadian oil stagnation.

There are alternative methods through which crude oil can be transported from west of Canada to east, including rail, truck, sea and tankers. However, D. Silva said, “Pipeline is the safest way to transport oil and gas. They are the most efficient and most cost effective, so it will not be a complete solution, it will not be an ideal solution, but if necessary it would be an option. ,

According to 2024 data from CER, pipelines exported 89.6 percent of Canada’s crude oil. The rest was sent by rail and other networks.

“Canada is actively looking for other export markets for its oil,” D. Silva said. However, there is no solution for the night for this, he said.

Even during the previous administration of the US President Joe Biden, concerns were raised about the need for Canada to improve their pipeline strategy. On its first day in the office, Biden canceled the Kestone XL crude oil pipeline from Canada to the US over climate change concerns.

“This is time for Canada to review its strategy because we see now, with the new administration, it can be very dangerous for us only for our exports,” economist Miguel Oulett in 2021 A report published wrote that Montreal Economic Institute (Mei).

Canadian pipeline operator Trans Mountain said that if the trump implements the tariff, Asia is likely to increase delivery, the Reuters said on Tuesday. A pipeline was expanded last year to bring oil to the Pacific coast of Canada, from where oil is sent to tankers to China, Japan and South Korea.

D. Silva said that banning oil exports in the US will also have a very negative impact on Canada’s own economy. “The oil sector is the biggest driver of our economy,” he said. “Given that America is our biggest export market, I think the federal government will think very carefully before choosing to do so, as domestic effects will be almost equally or in the form of effects on America.”

What else is at stake?

In 2022, 79.2 percent of Canada’s sophisticated oil came from the US, according to data from the observatory of the observatory according to data of economic complexity (OEC).

The US imports Canadian crude oil, which is refined to the midwests of the US, and then sold back to Canada and the rest of the world.

D. Silva said that one of the Canadian arguments are making America to prevent the release of tariffs, “Canada exports cheap, reliable, safe energy produced with high environmental standards and commitment to human rights, (and ) Sells on one.

By increasing high tariff inflation, fuel can make it expensive. They can also affect export-oriented areas, causing job losses-which will negatively affect Prime Minister Justin Trudeau’s Liberal Party, facing an election later this year.