US President Donald Trump has announced tariffs to Canada goods shortly after taking office in the White House, adding more uncertainty to the outlook for Canadian energy stocks. It is known that Canadian economy is heavily dependent on the U.S. market, especially in sectors such as energy, automobiles, aluminum, aviation, and agriculture.
Additional tariffs could hurt Canadian energy companies, disrupt commodity flows and increase costs for U.S. consumers and refiners, or even weaken demand for Canadian crude or trigger production disruptions.
The Canadian dollar, meanwhile, has weakened in recent months and could fall further as a result of Trump’s tariffs. A weaker Canadian dollar tends to help boost the profitability of Canadian producers who sell their products in U.S. dollars and pay for them in Canadian dollars.
In light of the potential tariff threat, the province of British Columbia has identified 10 private sector projects worth a total of $20 billion, including mines, renewable energy and natural gas, and it is committed to expediting approvals and permits to enable these projects to proceed smoothly.
The country is putting a new emphasis on how to double the capacity of LNG Canada. The project, Canada’s first natural gas export project, is located in Kitimat, B.C., and will begin shipping gas to Asian markets this year.
Given that the outlook for energy producers could be clouded by tariffs, investors can look to pipelines such as Enbridge (TSX:ENB). As one of North America’s top energy infrastructure and gas distribution companies, combined with its strong track record of dividend growth and shareholder value creation, Enbridge stocks remain a buy in 2025.
With the completion of all three acquisitions of U.S. natural gas utilities, Enbridge’s natural gas distribution business has become the largest natural gas utility in North America, setting the stage for strong and more predictable long-term growth.
Before that, 98 percent of the company’s cash flow came from long-term cost-of-service or “take-or-pay” contracts. In addition, 95 percent of Enbridge’s customer base is investment grade, and 80 percent of its earnings before interest, tax and depreciation are protected by inflation.
The company has two solar projects set to come online in 2025, the Fox Squirrel project has been completed by the end of 2024, and the Sequoia project will be completed in two phases, one in 2025 and one in 2026. The Fox Squirrel project has signed a long-term purchase agreement with Amazon to purchase 100 percent of the energy it produces. The Sequoia project has also been substantially contracted under a long-term purchase agreement. By capacity, the project will be one of the largest solar facilities in North America.
This means that 2025 will be the year in which multiple growth opportunities for Enbridge begin to kick in, allowing Enbridge stocks to continue their strong 2024 rally.
