Neil Malik
Should Canada use oil, potash or power as trade weapons?
Should Canada use oil, potash or power as trade weapons?
Image: Alberta Energy Regulator
The Topline
- Trade talks between Canada and the U.S. collapsed Friday night, with the U.S. imposing 50 per cent tariffs on roughly $20 billion of Canadian goods.
- Prime Minister Mark Carney said Canada will match U.S. tariffs "dollar for dollar" beginning September 8, targeting steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics.
- So far, Carney has made no mention of energy, potash, and electricity being included on Canada’s retaliation list .
- Ontario Premier Doug Ford has repeatedly called for using oil, potash and electricity as leverage, while Alberta Premier Danielle Smith posted on X that cutting off energy exports to the U.S. “is not a viable option.”
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Switch sides,
back and forth
Let’s bring out the big guns
The U.S. has explicitly excluded energy, potash, and critical minerals from its own tariffs, which isn't a signal of generosity –– it's a dependency.
Canada supplies nearly 60 per cent of U.S. crude oil imports, 80 per cent of the potash American farmers rely on , and electricity that Doug Ford says keeps the lights on for roughly 1.5 million homes and businesses in Michigan, Minnesota, and New York.
"The potash, the oil, we're their number-one customer in the world, they need to feel the pain rather than us constantly feeling the pain,” Ford told reporters last month.
Even former Liberal Prime Minister Jean Chrétien –– who’s no stranger to managing U.S.-Canada trade relations –– has argued that Canada should hit the U.S. "where it hurts" with export levies on potash, oil, gas, aluminum and electricity, using the proceeds to fund domestic infrastructure like a pipeline connecting Alberta to Quebec.
When a sitting Conservative premier and a former Liberal PM are converging on the same idea, mayyyyybe it’s time to take the idea a whole lot more seriously.
The Canadian public seems to be on board with a tougher approach. An Angus Reid poll found 76 per cent of Canadians believe Ottawa was right to walk away rather than accept a bad deal from the U.S., including 53 per cent of those who voted Conservative in the last federal election.
Another 64 per cent believe the country will emerge stronger in the long run by reducing its economic dependence on the U.S. The poll didn't ask specifically about energy export taxes, but it shows the public’s general appetite for a harder line with Americans.
Many American oil refineries are configured to process Alberta’s heavy crude. They can't easily swap over to refine other types of crude without disruption and major costs.
Cutting off supply would be economically destabilizing, but a targeted export tax would simply raise the price. Ontario tried a smaller version of that last year, when Ford implemented a 25 per cent electricity surcharge on Michigan, Minnesota and New York.
And yes, Trump threatened to double steel and aluminum tariffs in response, which prompted Ford to back down –– but the proposed escalations on both sides did ultimately defuse the situation.
It may not have been a clean win, but it was a proof of concept. Imagine the effect of a coordinated, full-scale version, with oil, potash, and electricity rolled in together.
Maybe all Canada needs to do is just let the threat dangle? Carney has said that Canada’s retaliatory tariffs won’t take effect until Sept. 8, two weeks from now, which gives negotiators on both sides enough time to still work out a deal, if the U.S. is willing to return to the table.
Canadians might be polite, but it’s about time to show the U.S. we’re certainly not pushovers.
It undermines our position
Time for a reality check: Threatening to use our biggest weapons would have to be a bluff. Because if we actually used them, things would be decidedly worse.
Eric Miller, a cross-border consultant and president of the Rideau Potomac Strategy Group, told the Globe and Mail that Canada’s energy resources are the country’s "biggest hammer" that “can't realistically be deployed” because it "would risk costly U.S. retaliation.”
Alberta Premier Danielle Smith has called withholding energy "a non-starter," warning "wars have been started over that kind of conversation.”
She’s right –– energy security is a consistent friction point in geopolitics all over the world, and Canada is particularly vulnerable.
Much of Alberta's crude physically flows to Ontario refineries via pipeline routes that loop through Wisconsin and Michigan before re-entering Canada. Washington could retaliate by disrupting Canada's own domestic supply chain –– which has been threatened before –– creating a self-inflicted wound that Ontario would feel before anywhere in the U.S. does.
Likewise, energy and minerals—including potash—have been among the most resilient parts of Canada’s economy throughout this trade war, in part because they’ve been spared from tariffs so far. Weaponizing Canada’s strongest, most stable industries risks more destructive American retaliation while creating new uncertainty in the one part of the Canadian economy that's actually holding steady.
Not only that, this could backfire anyway in the form of higher costs for Canadians. As we’ve written elsewhere, Canada exported about 3.9 million barrels per day of crude oil to the U.S in 2025. But we also imported about 390,000 barrels per day of U.S. refined petroleum products — things like gasoline, diesel, jet fuel and heating oil.
Similarly, about $4.2 billion worth of potash was exported to the U.S. in 2025, with much of it used to grow American crops. Some of that food gets exported back to Canada.
Any new export taxes on potash and oil risk driving the costs of groceries and other household and industrial products even higher for Canadians.
Perhaps Carney himself said it best earlier in the summer, before trade talks collapsed.
"Being a reliable supplier is important. Canadians are reliable. Canadians can be trusted," Carney told reporters during a press conference in Red Deer, Alta., last month.
"One of the biggest commodities, arguably the best, is trust... When you're a supplier of a key commodity, key service, you've got to think really hard about not supplying. I don't see the value of it."
As justifiable as it may seem, weaponizing Canada’s energy exports could permanently change how future buyers assess Canada as a partner.
And if Canada isn't willing to absorb the consequences of actually pulling the trigger, threatening to do so may cause more harm in the long term than intended.
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