The biggest lesson from all this is that Canada must find a way to diversify its trade, especially when it comes to energy. We need to build more pipelines, we need to diversify our customer base
I cannot help myself. At my heart, I am a self professed nerd when it comes to data. With all of the headlines in Canada regarding the potential of 25% tariffs being levied on Canadian exports starting on February 1st, I wanted to understand for myself what the data actually looks like. Note that I only looked at 2023 as the information was readily available, it is reasonably clean (i.e. no significant COVID hangover) and the 2024 data won’t likely be available for a while.
Canada and the United States are significant trade partners. In 2023 Canada exported US$438 billion to the United States while the United States exported US$353 billion to Canada, resulting in Canada having a trade surplus with the United States of US$85 Billion and thus the (uninformed) consternation when it comes to current talk south of the border.
United Nations COMTRADE database
Looking at the top exports from Canada, I drew an arbitrary line at the top 20 exports. This was not to say that businesses that do less than this are any less important, rather I just wanted to make a chart that was actually readable. As one would expect, energy and auto lead the way, accounting for 43% of all of our exports to the United States in 2023.
United Nations COMTRADE database
However, as with all countries, we also import a tremendous amount as well. Why? Because in simplified terms it is good to focus on that which you do best, and have in abundance, and leave other aspects to other countries that are good at other things. As such, automotive as well as machinery, nuclear reactors and boilers account for 31% of the trade flow going north into Canada in 2023.
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When dealing with the border, it is important to remember that goods flow both ways, and the curious part as it pertains to oil is that despite Canada being awash in black gold, eastern Canadian refineries cannot access crude from the west, so Canada needs to export it to the US and re-import it to Canada. Weird. If only we had a pipeline that could do this…
I think it is also useful to look at the net balances, by category, to better understand the tos and fros of trade. Similar to previous charts, I made an arbitrary cut off line, this time at net exports exceeding US$1 billion in 2023. No real surprises here as energy dominates the landscape as Canada is a significant producer of oil and gas, and produces far more than it can consume internally and accounts for 76% of Canadian net exports to the United States.
United Nations COMTRADE database
In terms of net imports, the picture is more balanced, with the top two categories being machinery, nuclear, boilers and electrical, electronic equipment accounting for a significant portion of Canadian net imports (37%) from the United States.
United Nations COMTRADE database
Moreover, if you look at the breakdown of many of the components, and yes I am generalizing a bit, you will see that a lot of what we export are raw materials / base inputs, while what we import are value added finished products. As I have said many times, Canada is the proverbial resource bread basket that the rest of the world would crave to call its own.
If you exclude energy (mineral fuels, oils, distillation products) from the above analysis, you actually return to a more balanced trade picture between the two countries, and Canada actually is a small ($15 billion) net importer from the United States. Why do I think that is a fair way to look at things? The United States is a significant consumer of Canadian energy, and heavy oil in particular is something that Canada produces a lot of and is consumed by the complex refineries located in Minnesota, Indiana and in the U.S. Gulf Coast. If you want to learn more about this, I strongly encourage you to follow Rory Johnston as he does some brilliant deep dive analysis on this sort of topic and others.
At the end of the day, if the Trump administration really is about “fairness” in trade, we need calmer minds to prevail on this topic, as the data shows that the trade relationship is fair, and Canada is a valued (and economical) trade partner. I have my own suspicions that this issue extends beyond trade deficits and even beyond the issues he has also cited of illegal immigration and flows of fentanyl, and could even be as simple as “I am doing this, because I can, and I will do whatever I can to benefit my country.” Is this rational and fair? No.
The biggest lesson from all this is that Canada must find a way to diversify its trade, especially when it comes to energy. Canada’s need to build more pipelines, needs to diversify it’s customer base, and needs to start acting like a country that is looking out everyone, not just it’s own self interest.
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Northern Gateway ($7.9 billion), cancelled in 2016
These projects were cancelled due to regulatory challenges, environmental opposition, and shifting political decisions on both sides of the border. This left Canada without key infrastructure to support energy exports.
For years, companies have tried to build the infrastructure needed to move Canadian oil and gas across the country and to sell to global markets. Billions of dollars have been invested in projects that never materialized, stuck in regulatory limbo, weighed down by delays, or cancelled altogether.
The urgency of this issue is growing.
Last week, 14 CEOs from Canada’s largest pipeline and energy companies issued an open letter urging federal leaders from all parties to streamline regulations and establish energy corridors, warning that delays and policy uncertainty are driving away investment and weakening Canada’s position in global energy markets.
The U.S. recently imposed tariffs on Canadian energy, adding new pressure to an already lopsided trade relationship. According to the 2024-2025 Energy Fact Book from Natural Resources Canada, the U.S. accounted for 89% of Canada’s energy exports by value, totalling $177.3 billion. This leaves the economy vulnerable to shifts in American policy. Expanding access to other buyers, such as Japan, Germany, and Greece, would help stabilize and grow the economy, support jobs, and reduce reliance on a single trading partner.
At the heart of this challenge is infrastructure.
Without reliable, efficient ways to move energy, Canada’s ability to compete is limited. Our existing pipelines run north-south, primarily serving the U.S., but we lack the east-west capacity needed to supply our own country and to diversify exports. Energy corridors (pre-approved routes for major projects) would ensure critical infrastructure is built fast, helping Canada generate revenue from its own resources while lowering costs and attracting investment.
This matters for affordability and reliability.
Our research shows engaged women are paying close attention to how energy policies affect their daily lives — 85 per cent say energy costs impact their standard of living, and 77 per cent support the development and export of liquefied natural gas (LNG) to help provide energy security and to generate revenue for Canada.
With increasing concern over household expenses, food prices, and economic uncertainty, energy corridors have become part of the conversation about ensuring long-term prosperity.
What are energy corridors, and why do they matter?
Energy corridors are designated routes for energy infrastructure such as pipelines, power lines, and transmission projects. With an energy corridor, environmental assessments and stakeholder consultations are completed in advance, allowing development to proceed without ongoing regulatory hurdles which can become costly and time consuming. This provides certainty for energy projects, reducing delays, lowering costs, and encouraging investment. They are also not a new concept and are applied in other parts of the world including the U.S.
In Canada, however, this isn’t happening.
Instead, each project must go through an extensive regulatory process, even if similar projects have already been approved. Energy companies spend years trying to secure approvals that don’t come to fruition in a reasonable time and as a result projects are cancelled due to sky-rocketing costs.
“Getting regulatory approval for energy transportation projects in Canada takes so long that investors are increasingly looking elsewhere,” said Krystle Wittevrongel, director of research at the Montreal Economic Institute. “Energy corridors could help streamline the process and bring back much-needed investment to our energy industry.”
Jackie Forrest, executive director at the ARC Energy Research Institute, pointed out that the time it takes to get projects approved is a major factor in driving investment away from Canada to other countries.
“Projects are taking five or more years to go through their regulatory review process, spending hundreds of millions if not a billion dollars to do things like environmental assessments and studies that sometimes need to be carried out over numerous seasons,” she said.
The cost of missed projects
Over the past decade, multiple major energy projects in Canada have been cancelled or abandoned. Among them:
Keystone XL ($8 billion), cancelled in 2021
Energy East ($15.7 billion), cancelled in 2017
Northern Gateway ($7.9 billion), cancelled in 2016
These projects were cancelled due to regulatory challenges, environmental opposition, and shifting political decisions on both sides of the border. This left Canada without key infrastructure to support energy exports.
LNG projects have faced similar setbacks. More than a dozen LNG export proposals were once on the table, but these same issues made most of these projects not viable.
Meanwhile, the United States rapidly expanded its LNG sector, now exporting far more than Canada, capturing global markets that Canada could have served.
“Ten to 15 years ago, there were about as many LNG projects proposed in Canada as in the U.S.,” said Forrest. “We have not been able to get those projects going. The first Canadian project is just starting up now, while the Americans are already shipping out far more.”
She cited a report that shows LNG development in the U.S. has added $408 billion to GDP since 2016 and created 270,000 direct jobs.
“That’s a major economic impact,” she said. “And Canada hasn’t been able to take part in it.”
The case for energy corridors: Creating prosperity, keeping costs in check
Energy corridors could help Canada build long-term prosperity while addressing affordability, job creation, and energy reliability.
“More efficient infrastructure reduces supply chain delays, helping to lower consumer energy costs and related expenses like food and transportation,” said Wittevrongel.
Wittevrongel notes that projects that cross provincial borders face both provincial and federal impact assessments which leads to duplication of effort and delays. Reducing this overlap would shorten approval timelines and provide more certainty for investors.
“One of the ways to improve this process is having the federal government recognize provincial environmental assessments as being good enough,” she said. “There has to be a way to balance that.”
Forrest said investors have already taken note of Canada’s high project costs and long approval timelines.
“TC Energy just built a pipeline to connect the BC gas fields with the West Coast that cost about twice as much as originally expected and took a lot longer,” she said. “Meanwhile, they recently completed a $4.5-billion natural gas project in Mexico under budget and ahead of schedule. Now they’re looking at where to put their next investment.”
Forrest explained that energy corridors could help de-risk infrastructure projects by front-loading environmental and stakeholder work.
“If we just had a pre-approved corridor for things like pipelines and transmission lines to go through, where a lot of this groundwork had already been done, it would really reduce the timeline to get to construction and reduce the risk,” she said. “That would hopefully get a lot more capital spent more quickly in this country.”
The path forward
Without changes, investment will continue to flow elsewhere.
“Energy corridors can go a long way to restoring Canada’s attractiveness for energy transportation and infrastructure projects as it cuts down on the lengthy bureaucratic requirements,” said Wittevrongel.
And Forrest agrees.
“We need to pick key projects that are going to be important to the sovereignty and economic future of Canada and get them done,” Forrest said. “I don’t think we can wait for long-term legislative reform — we need to look at what the Americans are doing and do something similar here.”
Energy corridors are about ensuring Canada remains competitive, lowering costs for consumers, and creating the infrastructure needed to support long-term economic prosperity.
For engaged women, this translates into a stronger economy, lower costs, and more reliable energy for their families.
“The two areas that this will be felt for every family are in lower energy costs and also in lower grocery or food prices as transportation of these things becomes easier on rail, or exporting grain reduces the price, for instance, ” said Wittevrongel.
Whether policymakers take action remains to be seen, but with growing trade pressures and investment uncertainty, the conversation around energy corridors is needed now more than ever.
A majority of Americans say it is more important for the U.S. to establish energy independence than to fight climate change, according to new polling.
The poll from Napolitan News Service of 1,000 registered voters shows that 57% of voters say making America energy independent is more important than fighting climate change, while 39% feel the opposite and 4% are unsure.
Those surveyed also were asked: Which is more important, reducing greenhouse gas emissions to combat climate change, or keeping the price of cars low enough for families to afford them?
Half of voters (50%) said keeping the price of cars low was more important to them than reducing emissions, while 43% said emissions reductions were more important than the price of buying a car.
When asked, “Which is more important, reducing greenhouse gas emissions or reducing the cost and improving the reliability of electricity and gas for American families?”, 59% said reducing the cost and increasing the reliability was more important compared to 35% who said reducing emissions was more important.
The survey was conducted online by pollster Scott Rasmussen on March 18-19. Field work was conducted by RMG Research. The poll has a margin of error of +/- 3.1 percentage points
Dan McCaleb is the executive editor of The Center Square. He welcomes your comments. Contact Dan at [email protected].
