Canada and the United States are locked in an escalating trade dispute after negotiations in Washington collapsed and new U.S. tariffs took effect. Now a fierce argument has broken out over whether Ottawa should do the one thing it has conspicuously avoided: turn the energy tap into a bargaining chip.
The numbers behind that idea are striking. According to Prime Minister Mark Carney, Canada supplies 99% of U.S. natural gas imports, 85% of U.S. electricity imports, and 60% of U.S. crude oil imports. Alberta alone exported close to $111 billion worth of oil to the United States in 2025, representing much of the province's nearly $177 billion in total global exports, according to Global News.
It sounds like leverage. Alberta Premier Danielle Smith says it is a trap.
Smith has flatly rejected proposals to tax or restrict Canadian energy exports to the United States. Her reasoning is rooted in the plumbing of North American energy infrastructure, which is deeply integrated and largely one-directional. Canada's natural gas has one serious customer. A commodities analyst identified only as Wang told CBC News that halting U.S.-bound gas shipments would trigger a severe supply glut inside Canada, crash domestic prices, and fill storage facilities to capacity. "There's no winner in this," Wang said.
Smith has gone further, mapping out the chain of retaliation she fears. She warned that a 50% Canadian export tariff on the four million barrels of oil sent to the United States each day could prompt Washington to impose a 50% to 100% retaliatory tariff on all oil and gas products in return, including refined fuels shipped back to Eastern Canada from American refineries. The result, she said, could be the loss of at least half a million jobs, concentrated in Alberta but spreading into Ontario and Quebec.
A full cutoff carries its own risks. Smith has cautioned that if Canada stopped exporting crude entirely, the U.S. could switch its refineries to Venezuelan crude and lose Canada as a customer, in her words, "entirely and maybe forever." Canada also lacks strategic oil reserves of the kind the United States holds, giving it no buffer if disruption turns into crisis, CBC News has reported.
Heather Exner-Pirot, an energy expert, was blunter still. She called restricting energy exports "wildly crazy," warning it would amount to Alberta being treated as a "sacrificial lamb" for the benefit of other provinces.
Yet the political appetite for doing something is real. Ontario Premier Doug Ford, former Alberta premiers Jason Kenney and Alison Redford, and Alberta New Democratic Party (NDP) Leader Naheed Nenshi have all called for keeping energy exports on the table as a bargaining tool. Carney has acknowledged Canada's energy clout but said publicly that he does not see the value in deploying it.
The case for leverage has academic support of a different kind. McGill University political science professor Daniel Béland called the U.S. claim that it does not need Canada "absolutely false," pointing to deep reliance on Canadian oil, natural gas, and integrated industries including automobiles.
So far, none of this has moved beyond argument. Energy products have not been used as leverage in the trade dispute, and Alberta's oil and gas exports have so far avoided U.S. tariffs entirely. The sector remains, for now, a zone of mutual restraint in an otherwise fractious relationship.
Smith's preferred strategy leans in the opposite direction. She has described her approach as being "too friendly, kind and helpful to resist," targeting U.S. congressional members and state governors in the hope that domestic pressure builds ahead of November midterm elections and pushes Washington to reverse course on tariffs.
Whether diplomacy can outrun the politics of the trade war remains an open question. What is clear is that the energy weapon sits loaded in the cabinet, with premiers, opposition leaders, and analysts lining up on either side of the question of whether pulling it out would hurt the shooter more than the target.
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