Recently, U.S. President Donald Trump’s continuous tariff threats have heightened tensions in U.S.-Canada trade relations and made Canada increasingly aware of the risks of over-reliance on the U.S. for energy exports. In today’s unpredictable trade environment, Canada is accelerating its review of oil pipeline policies and infrastructure, aiming to reduce its dependence on the U.S. market and achieve greater export diversification.
Since the expansion of Canada’s Trans Mountain oil pipeline was completed in May, tankers filled with oil sands crude have traveled from Vancouver, passing under Lions Gate Bridge to markets in Asia, such as China and Japan. For a long time, the U.S. has been the primary destination for Canada’s energy exports, but Trump’s tariff threats have raised concerns about this dependence. Canada’s government hopes that the $34 billion Canadian dollar (USD 24 billion) project, which nearly tripled the line’s capacity to 890,000 barrels per day, will help Canada establish a position in global oil markets and reduce its reliance on the U.S. alone.
Domestically, some Canadian energy leaders believe that the Trans Mountain pipeline expansion is only the beginning. They are calling for the revival of other previously shelved pipeline projects, such as Energy East and Northern Gateway, to develop new channels for transporting oil sands from Alberta to Ontario, Quebec, and even overseas markets.
The Energy East project originally aimed to convert an existing natural gas pipeline to transport crude oil from Alberta and Saskatchewan to eastern Canada’s refineries and shipping terminals, with a capacity of about 1.1 million barrels per day. Meanwhile, the Northern Gateway project, stretching approximately 1,178 kilometers with a capacity of 525,000 barrels per day, was initially designed to connect Alberta to the port of Kitimat in northern British Columbia, enabling crude exports to vast Asian markets.
These projects were previously opposed due to environmental concerns, Indigenous rights issues, and disagreements between federal and provincial governments. However, with Trump consistently threatening tariffs on Canadian goods, calls to revive these pipeline projects have grown louder across Canada.
The challenges to pipeline construction, however, go beyond regulatory approvals and opposition. Projects face serious financial pressures and criticism. For instance, by the time the Trans Mountain pipeline expansion was completed, its costs had skyrocketed to six times the original estimate. Moreover, in 2018, the Canadian government had to purchase the line to save it from cancellation after private investors exited. Despite these challenges, both the Canadian government and the public remain determined to strengthen the country’s energy infrastructure. Some industry players argue that Canada needs to expedite projects like Energy East and Northern Gateway, citing “national need,” and aim to start and complete construction during Trump’s presidency to secure strategic advantages.
On the other hand, environmental groups and some Indigenous communities believe large-scale oil pipeline construction is not a sustainable solution. Organizations like Greenpeace worry that restarting projects would weaken environmental and public health protections, leading to further controversy. Even if the Canadian government and companies could overcome regulatory, public, and financial resistance, building a robust oil network for global markets would still take significant time and resources.
In this context, increasing capacity on the existing Trans Mountain pipeline may present a more feasible short-term compromise. According to operators, capacity could increase by 200,000 to 300,000 barrels per day through infrastructure improvements, such as enhancing pumping power. The pipeline’s terminal currently ships up to 480,000 barrels per day, a figure expected to reach approximately 630,000 barrels per day by mid-year, thanks to upgrades at port facilities.
Nevertheless, even as it operates below capacity, the Trans Mountain pipeline is already reshaping global oil markets. China’s purchases of Canadian crude are steadily rising, replacing supplies from sanctioned oil-producing countries like Iran and Russia. This shift has also put downward pressure on the prices of oil comparable to Canada’s heavy crude from the Middle East and Latin America. At the same time, Canadian oil prices have risen and stabilized. Mark Maki, CEO of Trans Mountain Corporation, noted in an interview that the demand from Asian markets will persist, presenting a valuable opportunity to maximize the system’s utility.
Meanwhile, Canadian Prime Minister Justin Trudeau has highlighted that Trump’s tariff policies could not only harm Canada’s economy but also potentially lead to a recession. This looming crisis underscores the urgency for Canada to rethink its oil pipeline policies. Without sufficient leverage in the global trade arena, the economic losses could be catastrophic. Strengthening export channels and diversifying markets through pipeline development is not just a short-term response but also a long-term strategic move for Canada.
Whether Canada decides to restart additional pipeline projects or not, breaking free from its reliance on the U.S. market will not be easy. This ongoing debate over oil pipeline policies is expected to continue. Under the pressure of Trump’s tariff threats, whether Canada can truly establish a stable new framework for oil exports will depend on the outcomes of political negotiations and the government’s ability to implement its decisions.
