Is it Time Canada Punch its Bully in the Nose? Export Tariffs on Oil Might be an Answer.

Written August 15, 2025

By: newb Anarchist

#CanadaUS

#Trade

Graphic source: https://www.congress.gov/crs-product/IN12488

When the US slammed Canada with the first wave of tariffs in early 2025, there was one exception that stood out considering its importance: oil. Unlike other industries that saw a blanket 25% tariff take effect, O&G was tariffed at a comparatively low 10%.

One doesn't need to be well-versed in energy economics to understand why this exception was made. The US is heavily reliant on fossil fuels, and Canadian O&G plays a significant role in supplying that reliance. Though the US is itself a massive producer of some fossil products like LNG, US refineries rely on Canadian oil to the tune of ~25%. If Canadian O&G producers see an increase in their costs, that will inevitably translate to an increase in prices on refined products like gasoline and diesel. That would be bad news for the economy, which is why DJ's admin chose to minimize the impact by keeping the tariff low.

For the last 50 years, the US got very comfortable buying Canadian O&G at a good neighbor's discount. While it is true Canadian crude isn't exactly easy to sell on the global market, trade deals going back to the beginning of the post-war period enabled the US to buy Canadian O&G at a juicy discount of ~30%, compared to global markets. In turn, US refiners developed the infrastructure specifically to exploit that discount. So much so that now, if US refiners were forced to switch to different providers like those from Venezuela or Mexico, it might take them a decade to build the infrastructure to do so. It might take even longer before it's profitable.

This is precisely why it's time Canada placed retaliatory, export tariffs on all O&G products going to the US. End the retaliatory import tariffs costing Canadian consumers, and instead focus specifically on bringing economic pain to the US. And why not? If DJ and his dog pack can bring pain to the Canadian economy for irrational reasons, Canadians have their own cards to play in return.

The US' reliance on cheap O&G is its kryptonite. In a situation where they're left with no real options other than to pay high prices for crude oil, what are they going to do? Consume less? Drill more? The former is a joke; the latter is not feasible. Simply put, if Canadian producers sold O&G at an inflated price, the US is buying it at those prices and eating the pain, such is their reliance on fossil fuels. So, since Americans have so little regard for Canada's economic well-being, we can return the favor. Match US tariffs with export tariffs on O&G and watch them, hopefully, squirm.

For Canada, an aggressive export tariff on oil would likely be a mixed bag result. In the short term, Canadian coffers would likely explode from the export tariff earnings. Given that US refiners would have no choice but to buy Canadian O&G for some time, it's probably not an understatement to say Canada would gain hundreds-of-billions of dollars from the export tariff.

Unfortunately, Canadians would see their cost of living increase in the short term. Though Canada can refine some products like gasoline for itself, the overall reliance on cheap US commodities will be a keystone of Canadian economics for at least a decade to come. That means that when things get expensive for Americans, they do so for Canadians as well. A clever government might use tariff earnings to offset such economic pains; nonetheless, it is a near certainty to say costs would go up all over the continent if Canadian crude prices surged.

There is also the issue that DJ's admin would certainly find ways to punish Canadians for sticking-up for themselves. It is feasible that the US find other ways to cause Canadians pain, such as increasing tariffs further or coercing allies away from trading with Canada, to name a few examples. In fact, it is impossible to imagine that DJ wouldn't do something in reaction. He would certainly react, but not because he cares for American interests—he could end all this by ceasing his trade war if he really cared about Americans. He would react because what else would such a person do? Reflect on how we got here?

This leads into the point of why Canada should slam an export tariff, regardless of the potential negative consequences for Canadians in the short term; while there will be economic pain and we risk further ruining relations with the US, that is already happening and not because of Canadians. DJ Trump, elected by the US electorate, launched an irrational and unjustifiable trade war against Canada. In responding with aggressive export tariffs, Canada is simply taking a little more control of its destiny. Instead of sitting idly by while the US punches us in the face, Canada should lean in and break its nose with a headbutt.

Long term, the effects of this trade war could go either way. Canada might use the opportunity to push itself away from relying so heavily on the sale of fossil fuels to grow its GDP, or it might find other partners to buy the product. Or, maybe Americans get sick of paying high prices for gasoline way faster than Canadians, subsequently booting DJ from power, then coming to the bargaining table to restore a healthy trade relationship. Whatever happens, is it not better to act and learn than to just take it and learn?

Thanks for reading!

Please forgive us! This website is still under construction. We're working to make content like this regularly available, but aren't quite there yet. Check back soon!