As Washington's 50 per cent tariffs bite, some in Canada eye the country's vast energy exports as a counterweight. The numbers look formidable — but wielding them would cut both ways.

A tempting arithmetic

When trade talks between Ottawa and Washington collapsed on August 22, and the United States imposed 50 per cent tariffs on roughly US$20-billion of Canadian goods, an old idea resurfaced with fresh urgency. If the Americans will punish Canadian exporters, why should Canada not reach for the one lever that makes Washington flinch: energy? Prime Minister Mark Carney gave the notion voice himself, reminding Americans that Canada supplies much of the fuel behind their prosperity. “Controlling our energy means controlling our destiny,” he said. Canada is the largest foreign supplier of crude oil, gas, electricity and uranium to the world’s biggest economy. Yet the distance between possessing Leverage and using it profitably is wide, and the arithmetic that looks commanding on paper becomes treacherous the moment anyone pulls the trigger.

The scale of the flows

The raw figures explain why the idea keeps returning. In 2025, Canadian energy exports to the United States were worth C$157.5-billion, against just C$34.4-billion flowing the other way. Crude Oil dominates: 3.9 million barrels a day, worth C$126.1-billion, enough to make Canada the source of a record 63.4 per cent of all American crude imports. On gas, dependence is near-total: Canada supplies close to 100 per cent of US imports, 8.6 billion cubic feet a day worth C$12.5-billion. In electricity, Canada supplied 81.3 per cent of American power imports, worth C$3.3-billion, most of it hydro from Quebec, Ontario, Manitoba and British Columbia.

Uranium rounds out the picture. Canada is the world’s second-largest producer, responsible for about a quarter of global output, and in 2024 supplied 33 per cent of the uranium bought by US nuclear reactors — their single largest foreign source. On paper, Ottawa holds cards in four separate energy markets.

The mechanisms on the table

Leverage is only as good as the instrument that delivers it, and here Canada has choices, none of them clean. The bluntest is an export tax or Surcharge — a levy Ottawa or a province could add to the price of crude, gas or power crossing the border, capturing Revenue while raising costs for American buyers. A second option is a Volume restriction: throttling barrels or curtailing electricity flows to create scarcity. A third, subtler route is regulatory friction — slowing approvals and shipments without a formal cut-off.

Each mechanism runs into the physics of the trade. Oil and gas move through fixed pipelines — the Enbridge Mainline, Keystone, Trans Mountain — and heavy Canadian crude is refined in Midwest and Gulf Coast plants engineered specifically for it. Electricity flows across a hardwired grid into New York, New England, Michigan and Minnesota. This infrastructure cannot be swung toward other customers overnight; it is the reason the dependence exists, and the reason a Canadian squeeze would land. But fixed infrastructure cuts both ways: Canadian producers cannot easily sell those same barrels or electrons anywhere else either.

The Ontario precedent

This is not a purely theoretical exercise. Earlier in the dispute, in 2025, Ontario briefly threatened and then applied a surcharge on electricity exports to New York, Michigan and Minnesota before pausing it. The episode is instructive on two counts. It proved that a province with control over a specific export can act quickly and get Washington’s attention. It also showed how fast such a move can be walked back once the political and commercial costs come into focus.

The precedent matters because it locates the leverage as much in provincial hands as federal ones. Ontario and Quebec together produce over half of Canada’s power and over half of its electricity exports; Saskatchewan holds the uranium; Alberta the oil. That fragmentation makes a unified national energy strategy harder to orchestrate — and it means the most hawkish voices, such as Ontario Premier Doug Ford, may not always be aligned with a more cautious Ottawa.

Why it would hurt Canada too

The central weakness of the energy weapon is that it is pointed at Canada’s own economy as much as at America’s. An export tax on crude would raise costs for the US refineries that are, in practice, the only buyers for much of Alberta’s heavy oil; if those refiners paid more, Canadian producers could well end up absorbing part of the hit through lower netbacks. Curtailing volumes would idle Canadian production while handing Market Share to other suppliers. Electricity surcharges risk pushing American utilities to accelerate their own generation, eroding a customer base that took decades to build.

There is a macro dimension too. Energy is Canada’s largest export earner, and the sector underpins the loonie, already weakened on trade tension into the low-70-US-cent range. Weaponising energy could invite American countermeasures on the very flows Canada depends on for hard currency, and would do nothing to shield the workers in steel, autos and agriculture already exposed to the tariffs in force.

Ottawa’s deliberate reluctance

It is precisely this double-edged quality that has made the federal government wary. Earlier in 2026, Mr. Carney said Canada would not “leverage” energy and critical minerals as a bargaining weapon in the trade talks — a considered position, not an oversight. Ottawa’s formal retaliation, announced for September 8, is a conventional dollar-for-dollar Tariff package of roughly C$28-billion aimed at steel, dairy, appliances, farm equipment, pulp and paper, and electronics. Notably, energy is absent from that list.

The reticence reflects a judgment that Canada’s credibility as a stable, reliable energy partner is itself a strategic asset — one worth more over time than a single dramatic gesture. A supplier that threatens to cut off customers when politics sours teaches those customers to diversify away, and the United States, for all its dependence, has the Capital and the geology to do so eventually.

A lever best left holstered

None of this means the leverage is illusory. Canada’s dominance of American energy imports is real, and the mere knowledge that Ottawa could act imposes a quiet discipline on Washington’s calculations. That deterrent value may be the asset’s highest use: potent precisely because it is held in reserve rather than spent.

The honest conclusion is that the energy weapon is a genuine source of strength and a poor instrument of first resort. Its power is structural and slow; its costs are immediate and fall heavily on Canadians. For a government that has framed its approach as “pragmatic, patient and persistent,” the sober course is to keep the option visible, credible and undischarged — a reminder to the other side of the table, not a shot fired.