Trump’s tariff threats are pushing Canada’s largest oil producer to break their dependence on the United States

Houston – The deeply integrated American oil and gas market is found in Crossroads, and Canada’s largest oil producer warns that it will diversify its exports away from the United States if the president Donald TrumpTariff threats do not end.

Alberta Prime Minister Danielle Smith presented on Wednesday two possible futures for the continent. In one, Canada and the United States arrive at an agreement to create “North America strength”, with a new pipeline built to support 2 million barrels per day in additional exports to the US market, Smith said at the Ceraweek energy conference.

This will support Trump’s “energy domain” agenda, Smith said, allowing the United States to increase its exports to the global market by filling those barrels with oil imported from a nearby neighbor and ally. He will maintain low consumer prices in the United States, he said, which is also part of the agenda on which Trump campaigned.

Alberta wants to provide the United States with the energy it needs to win the race against China to achieve dominance in artificial intelligence, said Smith. “I don’t think any of us want to see a communist and totalitarian regime become a world world leader in AI,” said Prime Minister.

In the other future, Trump continues to fight its commercial war against Canada and Alberta begins to search for oil and gas clients beyond the United States, said Smith.

Canada is the fourth largest oil producer in the world and Alberta is the largest producer in the country. Around 97% of the 4 million BPD of oil exports in the country went to the United States in 2023 with several European nations and Hong Kong taking the rest, according to Canada Energy Regulator. Alberta supplied 87% of Canada’s exported oil to the United States in 2023.

“There are at least six or seven projects that are emerging in Canada in case we cannot reach an association agreement with the United States,” said Smith.

The uncertainty caused by Trump’s tariff threats has already forced Alberta to start “looking at more opportunities to obtain more barrels from our borders in addition to the United States,” the provincial energy minister Brian Jean said Tuesday.

Alberta is in active discussions with South Korea, Japan and European nations on shipping oil exports to those countries, said the Minister of Energy. “The truth is that we are looking in all directions at this time, except the United States in relation to our priorities,” Jean said.

Trump tariffs have dismissed financial markets and caused confusion among investors during the past week. The president on Wednesday imposed 25% tariffs on Steel and aluminum imports from Canada. He has Paused until April 2 The sanctions on the Canadian oil and gas, as well as the duties of other goods that comply with the commercial agreement that Governs North America.

The Trump administration has not provided clarity about how much of Canada’s energy exports to the United States conforms to the commercial agreement. Oil and gas that would not meet a 10%rate. United States Secretary of Energy Chris Wright declined to provide details When CNBC asked him on Monday.

Smith said Wednesday that Canadian oil producers are busy filling the paperwork to ensure that their exports to the United States comply.

“There was a paperwork problem that our companies had,” said Smith. “There was no reason to register, and now. I imagine that everyone has called their lawyers and fulfill.

But it is not clear if Trump will proceed with the tariffs when his pause expires on April 2. Wright said an agreement with Canada on Monday that avoids tariffs on oil, gas and another energy “is certainly possible” but “it is too early to say.”

“We cannot reach very low rates or rates, but it must be reciprocal,” Wright said in an interview with CNBC’s Brian Sullivan.

Alberta will take to pivot the markets beyond the US. If the tariffs enter into force. Almost all pipes in Canada run south to the United States, Canada only has a pipe that extends from Alberta to the west coast of the country in British Columbia, providing access to Asian markets. There are no pipes that range from Alberta to the east coast of the country.

Smith said that Canada is looking at three different pipes proposals to its west coast, at least one pipe in the Northwest territories, one in Manitoba, one in the Bay of Hudson and another in the east of Canada.

“Those are conversations that we didn’t have three months ago,” Jean said about the pipes. But Canada took 12 years to expand its Trans Mountain pipeline that connects to the west coast of the country.

Alberta is not interested in taking a page of the Ontario Play Book, said Jean on Tuesday. Prime Minister Doug Ford Tax A 25% surcharge in electricity exported to the United States in response to Trump rates. The later suspended the penalty After the United States agreed to resume conversations.

“We do not believe that this is the correct way to do it,” said Jean about Alberta’s position. “We want to disparable the situation.”

Canada has presented several options to the United States, said Alberta Energy Minister. Jean refused to provide details, but said the Trump administration needs a strong strategic oil reserve to achieve its energy domain objective.

“It also means that they have to continue obtaining a good constant supply of Canada products,” he said.

If the tariffs are in force, they will hurt both Canadians and Americans, particularly people who cannot pay a price increase, he said. The price increase will be divided “quite uniformly” between American customers and producers in Canada, he said.

“All parties will feel it and, frankly, there are many people at this time (…) who cannot pay it,” he said. “We need to think of these people because they are the least fortunate who really have no choice but to buy fuel.”

Jean hit Trump’s repeated calls for Canada to become state 51.

“As long as we are in charge, we don’t care,” Jean said. “But the truth is that Republicans would never be chosen again.”