These Canadian Energy Firms Could Be Among The Hardest Hit By U.S. Tariffs
With U.S tariffs on Canadian imports coming into effect on Tuesday, March 4th, analysts have started to quantify the potential losses for Canadian companies from the trade spat.
Energy firms account for 40% of the top 10 Canadian companies that would be the biggest revenue losers as U.S. tariffs go ahead, according to a recent report by Syntax Data.
Last week, U.S. President Donald Trump said that the tariffs on Canada and Mexico – delayed by a month to March 4 – would go ahead as planned. The U.S. plans a 25% tariff on all imports from Canada and Mexico, with the exception of Canadian energy which would face a 10% tariff.
After the tariffs were delayed by a month, Syntax Data said, “While the impact on US-Canada negotiations remains uncertain, one thing is clear: some businesses will be hit harder than others.”
The energy sector is at risk of losing billions of U.S. dollars from revenues, considering how much business Canadian energy producers do with the U.S., according to Syntax Data’s research.
A total of 40% of the top 10 companies identified are in energy production, including Enbridge Inc. and TC Energy, which each generate about half of their revenues in the U.S., the report found.
“With 60 per cent of U.S. crude oil being imported from Canada, a 10 per cent tariff on energy could have major implications for the energy industry,” Syntax Data says.
“While lower tariffs are likely designed to avoid extreme energy price hikes for U.S. consumers, Canadian energy companies with significant U.S. exposure would face major ramifications.”
Of the ten most exposed Canadian companies, four are in the energy sector, per Syntax Data. These are Enbridge (second most exposed of all Canadian firms), TC Energy (fourth), Parkland Corp (ninth), and Suncor Energy (tenth).
Enbridge, the pipeline giant operating Mainline, the largest pipeline network that sends Canadian crude oil to the United States, generates 45.5% of its revenue from U.S. operations, while the share is even higher for TC Energy, at 52.2%. Parkland and Suncor have lower U.S.-generated revenue exposure, with U.S. operations accounting for 20.1% of Parkland’s revenue and 13.1% of Suncor’s.
The most exposed Canadian company is in the chemicals sector, fertilizer producer Nutrien, according to Syntax Data’s report.
Still, a lower 10% tariff on Canadian energy and “the fact that U.S. Midwest refineries may not have immediate substitutes for Canadian heavy crude oil gives a relative (not absolute) reprieve that would relieve some pressure on energy-producing provinces—mainly Alberta, Saskatchewan and Newfoundland and Labrador,” RBC said.
Canadians overwhelmingly support retaliatory tariffs, a poll for Bloomberg showed last month, while Canadian policy makers are now more inclined than ever to find alternative export avenues for Canadian oil, almost all of which currently flows south to the U.S.
The province of Saskatchewan in Western Canada will consider all permits for pipelines crossing its territory as “pre-approved,” Premier Scott Moe said last week, writing “Effective Immediately: All pipeline permits going east, west, or south received in Saskatchewan will be considered pre-approved.”
“We encourage all provinces and the federal government to do the same,” Moe wrote on X.
The U.S. tariff threat was a wake-up call for Canadian policymakers that the federal and provincial governments may have too hastily scrapped over the past decade Alberta-to-coast pipeline projects that could have diversified Canada’s oil and gas exports.
By Tsvetana Paraskova for Oilprice.com