Trump tariffs are the ‘weaponization of uncertainty,’ says trade analyst
With Donald Trump set to become the next president of the United States, some market watchers are feeling uneasy about what the Republican leader’s “America First,” protectionist trade policies will do to Alberta’s economy.
Among the most concerning policies is Trump’s proposed worldwide minimum 10 percent tariff on imported goods and the potential implications for Alberta’s energy sector.
In Trump’s victory speech, the former president vowed to “govern by a simple motto: Promises made, promises kept.”
It’s something Al Salazar, head of macro oil and gas research at Enverus Intelligence Research, says will keep oil market forecasters on their toes for the next four years.
“The one thing that’s the big cloud that’s hanging over in terms of uncertainty is Trump’s proposed tax on all imports, anything between 10 to 20 per cent,” said Salazar, who is also the Calgary Eyeopener energy columnist.
“It kind of doesn’t make sense to tax crude imports into the U.S. because that’s going to push up gasoline prices and be inflationary for U.S. citizens. But on the other hand … in terms of supply chain, that is really concerning.”
Salazar believes anything that could tilt a trade advantage toward the U.S. is something that warrants concern in the Canadian energy sector.
“In a way, this election is all about change, and certainly we’ve got change coming.”
Virtually all of Canada’s crude oil was exported to the United States last year, with 87 per cent — or 3.3 million barrels per day — of that oil coming from Alberta, according to data from the Canadian Energy Regulator.
This year’s completion of the Trans Mountain pipeline expansion from Alberta to the West Coast has improved Canada’s access to Asian markets, but much of the oil unloaded from the pipeline is being shipped by tanker to California.
With Alberta being the largest crude producer in the country, some say this new era of Trump could mean the province’s economy is particularly exposed to what’s going on in the States. Trump also promised during his campaign that it would be “drill, baby, drill” on Day 1 of his presidency.
“At this point, we’re quite concerned about what the potential impacts to Canada and to Alberta, specifically, could be, knowing that we’re very trade exposed,” said Ruhee Ismail-Teja, vice-president of policy and external affairs for the Calgary Chamber of Commerce.
“In fact, $3.6 billion every day crosses between the Canada-U.S. border, so any change in government will have massive implications for the Canadian economy.”
With the presidential election still resonating across the globe, Ismail-Teja says it’s challenging to predict how a second Trump term could be felt in Alberta, as how these proposals would look in practice isn’t exactly clear yet.
“There’s conversations about whether Canada’s oil and gas sector might receive a carve-out from tariffs because the impact to the U.S. would be so significant in a negative way if they did follow through with that promise,” she said.
However, one trade expert says there’s no reason to believe Canadian energy wouldn’t be impacted.
Carlo Dade, the director of trade and trade infrastructure with the Canada West Foundation, says he believes Trump’s proposal for a global baseline tariff doesn’t seem to make any exceptions for oil and gas.
“This is not a 10 per cent tariff … it is the weaponization of uncertainty,” he told CBC Radio host Kathleen Petty on Wednesday, adding the uncertainty is to force jobs back to the U.S. across the economy.
“This is a threat unlike anything we’ve ever faced before.”
Because of how the former president will now be surrounded by a different team and the implications of the MAGA think-tank that is Project 2025, Dade foresees a very different environment for a second Trump term. Although it’s still early days, Dade says it’s important to consider the “substance” behind what Trump says.
Trump could bump oil prices
But not everyone agrees four more years of Trump would have negative impacts on Alberta’s energy sector.
“I think a Trump presidency is bullish for the price of oil,” said Eric Nuttall, partner and senior portfolio manager at Ninepoint Partners in Toronto.
“The reason I believe that is that, domestically, the ‘drill, baby, drill’ narrative is toothless, meaning no president can influence the rate of production growth.”
Nuttall doesn’t believe Trump will place tariffs on Canadian oil, as the U.S. energy industry is heavily reliant on Canadian heavy oil imports.
“They would be shooting themselves in the foot were they to make their very own feedstock more expensive,” he said.
He anticipates Trump to be hawkish on enforcing existing U.S. sanctions on oil-producing Iran, which could ultimately trim global supplies.
Calgary-based wealth portfolio manager Martin Pelletier also thinks Trump’s presidency could drive up oil prices.
However, he says it’s still too early to determine whether Trump’s win is a net positive or a net negative for Alberta, specifically.
“I do worry that if we don’t take a professional stance on dealing with an uncertainty around the Trump administration, and if we use it for political means for that government to stay in power, then it will have economic consequences,” Pelletier said.
Overall, Ismail-Teja, with the Calgary Chamber of Commerce, says because the U.S. will prioritize restoring “anything that can be brought back to the U.S.,” manufacturing is naturally at the top of that list, which would likely affect the energy industry in particular.
“As much as we’re collaborators, we’re also competitors.”
She anticipates there will need to be plenty of work ahead for different levels of government in the two countries to establish solid relationships.
“We know that while President Trump has been in before, there’s a significant turnover of officials around him,” she said.
“At the state level, there will be a huge importance for provincial and federal governments to have state-to-province relationships and really communicate the importance of the Canadian economy to America.”
Alberta Premier Danielle Smith acknowledged the relationship between Alberta and the U.S. in a post to X, formerly known as Twitter, where she also congratulated Trump and his running mate JD Vance on their victory.
“Alberta and the United States have a long standing trading partnership that has strengthened both economies and improved quality of life in both jurisdictions,” reads the post.
Smith also said Alberta is the single largest supplier of crude oil and natural gas to the United States, making it a critical part of North American energy security.
The premier said she looks forward to reinforcing those ties with the new administration.
Alberta has to ‘change the language’
Dade, with the Canada West Foundation, isn’t so sure shining a spotlight on the province’s energy exports to the U.S. is the kind of thing that helps Alberta.
“If you were to tell JD Vance that you’re exporting oil and gas to Ohio, his first reaction is, ‘Don’t we have oil and gas here? Why do we need Canadians? You’re taking jobs from Americans.’ You have to change the language,” said Dade.
“What we’ve been using for decades will now do us harm.”
In order for Alberta to survive this next round of the Trump administration and to understand the “economic populist wing of the MAGA movement,” he says the province needs to distinguish itself from the rest of Canada and China, as well as emphasize that Alberta’s oil and gas industry exports jobs to the United States.
Agriculture, too
Alberta’s largest export market is the U.S., according to government data from 2023. That year, exports increased by just over 20 per cent from 2022 to reach $8.9 billion, and oil and gas isn’t the province’s only industry that’s impacted by what happens south of the border.
In 2023, Alberta exports of agricultural and food products set a fourth consecutive record at $17.9 billion, up 10.5 per cent from the year prior.
James Rajotte, the Alberta senior representative to the U.S., told CBC Radio’s Alberta at Noon that Albertans have to be concerned about any potential tariffs on any Canadian products.
“We have to realize we’re in a different era now. Both parties are more protectionist, both parties are more focused on the United States returning manufacturing, especially jobs, to the U.S.,” said Rajotte on Wednesday.
“We are not in the Ronald Reagan free-trade era anymore, and we really have to adjust to that.”
