Oil, Gas and Power Still Exempt From 50% US-Canada Tariffs as Oct. 30 Product Swap Nears

Since the Trump administration imposed 50% tariffs on Canadian goods this summer, and Ottawa answered in kind a month later, both governments have fired at nearly everything except energy. Oil and natural gas are exempt. So are electricity and some petroleum products, though those remain under a separate 10% tariff imposed in 2025.

The reason is plumbing, not politeness.

The numbers that keep energy off the table

Canada supplies half of all US foreign petroleum imports. It is also the only foreign country that sends electricity directly into the US grid, through 34 major transmission points.

The dependence runs both ways. In 2024, 84% of Canadian oil production and 76% of Canadian electricity production went to the US, according to University researchers writing in The Conversation. Without American buyers, they write, there is no real energy market in Canada.

Transmission capacity between Canada and the US totals roughly 28 gigawatts. Links between Canadian provinces total only about 17 gigawatts. Each province runs its own grid, and selling south has long been easier and more profitable because the US population is almost ten times larger.

Where the lights would go out first

Ontario and Quebec lines can deliver about 4,600 megawatts to New York, roughly 15% of the state's peak summer demand. Imports from Canada covered 9% of New York's demand during the July 3 heat wave. A Cornell study found they supplied about 45% during some five-minute intervals.

Grid operators match supply to demand every second. Losing a large block during a stress period can trip protective systems and cause cascading outages.

Ontario Premier Doug Ford has already put that on the table. Days after the August tariffs, he said Ontario would halt electricity exports to New York, Michigan and Minnesota if the dispute worsened. No cutoff has been ordered.

Vermont has a particular stake. About one in four kilowatt-hours Vermonters use comes from Hydro-Québec under a contract that runs through 2038. Quebec's public pension fund controls the company that owns Green Mountain Power and Vermont Gas Systems. And since Oct. 5, Quebec has been governed by a party that wants the province to leave Canada.

The Oct. 30 tariff swap

The most recent move came Oct. 23. The administration announced it will lift the 50% tariff on some Canadian goods used in agriculture, including certain machinery, refrigeration products, packaging and plywood, effective Oct. 30. A new 50% tariff will hit Canadian carpet, certain valves and waste products on the same date.

The wider tariff wall barely moves. Roughly $20 billion in Canadian goods stays under the 50% rate, about 5 cents of every dollar Canada sells to the US. It is the second time since August that the administration has pulled some products off the list and put others on.

The Wall Street Journal reported the relief was aimed at helping Maine Sen. Susan Collins, a Republican in a close re-election race. Collins had asked for the relief, and Maine depends heavily on trade with Canada. The administration has not been quoted in these accounts giving that reason.

The administration has also threatened to double tariffs on Canadian vehicles in January if the two countries do not reach an agreement. Trade negotiations broke down in August.

Canada's pivot, and its limits

Prime Minister Mark Carney announced a national electricity strategy in May that aims to double Canada's grid by 2050, with priority on east-west connections. The government named five priority interprovincial transmission links in June. In July, Carney and the premiers agreed to finish pre-development by July 2027 and start the first projects by the end of 2027. Ottawa has also set a goal of doubling exports to countries other than the US within a decade.

Canadian officials frame the grid push as a matter of affordability, reliability and national security.

Wall Street Journal economics commentator Greg Ip argued Oct. 16 that Trump's tariffs and annexation talk may push Canada to build the pipelines, power projects and trade routes running east-west that it has struggled to build for generations. The record so far is thinner than that argument. The east-west lines remain in planning, no construction date falls before the end of 2027, and the interprovincial grid is a fraction of the cross-border one.

Canadian energy outlet Energy Now put the integration point this way: "Pipelines, refineries, natural gas systems, electricity grids and fuel-distribution networks do not stop functioning simply because a politician declares that one country no longer needs the other."

The US side is shifting too. Gulf Coast refineries are importing more Venezuelan crude after the Trump administration ousted and arrested Nicolas Maduro in January and moved to revive Venezuela's oil industry. That gives Canadian producers a competitor for the American refiners that now buy half of US petroleum imports from them.

Cutting ties would also cost reliability on both sides, with unequal effects. Canadian power is critical to the US Northwest when supplies are tightest, while British Columbia and Ontario run grids synchronized with Washington state and New York.

The next dates are fixed: the new tariff list takes effect Oct. 30, the vehicle-tariff deadline falls in January, and the first east-west pre-development milestone is due in July 2027. Whether energy stays exempt through all three is the open question.