The oilpatch thought it had dodged a bullet, until Trump mentioned tariffs again

Alberta business and oilpatch leaders are returning home from Washington this week after the U.S. presidential inauguration festivities — and gritting their teeth after a roller-coaster of emotions.

They arrived for the ceremony feeling anxious and concerned about the threat of tariffs on Canadian goods. Oil and natural gas are Canada's top export to our southern neighbours.

In the morning hours before Monday's swearing-in ceremony, news reports suggested tariffs were not going to be announced on the first day of Donald Trump's return to office, as he had previously pledged.

Indeed, there was no mention of the tariffs in speeches or in the dozens of executive orders Trump signed later that day.

Oil and gas leaders felt relief, even joy, as Trump proclaimed "Drill baby drill" in comments about needing to keep fuel prices and inflation low. Those from Alberta said they felt encouraged that the president's attitude surely meant he wouldn't then slap tariffs on Canadian oil, which would most likely raise prices at the pump in parts of the U.S.

The sun had already set in Washington, when all the hope and optimism came to a crashing halt. While signing various executive orders at the White House, Trump answered wide-ranging questions from reporters, including about tariffs on Canada and Mexico.

Yes, the 25 per cent tariffs are coming, responded Trump: "I think we'll do it Feb. 1."

All of this happened in a single day and could be a microcosm of what the next few years could be like for the Canadian oilpatch as the sector buckles up for a wild ride with Trump back in charge. 

The tariff threat was never really off the table, just delayed.

"It's a bit of a reality check for sure. But, anyone who had this notion that it was gone was living in a world of magical thinking," Deborah Yedlin, president of the Calgary Chamber of Commerce, told CBC News in Washington, a few blocks from the White House.

"I'm not sure how much thought has been put into this date or deadline. Having said that, whether it's Feb. 1 or March 1, no tariff is good," she said.

Roll up the sleeves, again

Any good feelings after the inauguration speeches were wiped out quickly by Trump's remark, said Adam Legge, president of the Business Council of Alberta.

"We felt we had dodged a bullet and I was saying we dodged a bullet for now. We knew something was going to be coming," said Legge.

"What we didn't want to happen is to go back to sleep and be complacent. And so a few hours later we were awoken again [by Trump's comments] and realized that we've got some work to do," he said.

On Monday, Trump did sign an executive order to assess compliance with trade practices and agreements, including the Canada-United States-Mexico Agreement, signed in 2020.

No consensus on tariffs

Since Trump's election victory, there have been several reports about how the new administration could implement tariffs — such as a broad 10 or 25 per cent charge on all Canadian goods or a levy that excludes certain industries. 

There was also a report about a gradual approach, with tariffs increasing by a few per cent every month.

The varying ideas could mean there are differing opinions among Trump's team on how to tackle trade and tariffs. By not taking action on inauguration day, the new administration could be buying itself some time.

"We can assume that there's an argument or a debate going on within the incoming administration and there are different personalities, different philosophies involved," said Charles Lichfield, a geo-economics analyst with the Atlantic Council, a Washington-based think-tank.

Canada is one of the U.S.'s largest trading partners, with annual trade approaching $1 trillion. Trump has targeted Canada and Mexico, in part, over border security issues and an uneven trade relationship.

"Everyone accepts now that President Trump has a huge mandate and part of that mandate includes tariffs. It doesn't mean that everyone agrees with a blanket tariff on all goods entering the U.S., and it certainly doesn't mean that everyone agrees with 25 per cent on Canada," he said.

The new administration's overall direction on tariffs is clear, but officials haven't decided yet on the best strategy on implementing them, said Robert Johnston with Columbia University's Center on Global Energy Policy in New York.

"Yet having said all that, I think Canadian energy is not the target here. There are definitely some grievances with Canada, including trade, but I think we have to remember that the context of [Trump's] mandate is really to restructure the relationship with China and to secure the border with Mexico. The grievances with Canada are still on the list, but much farther down the list," he said.

For some of Trump's supporters, tariffs are not a big issue, but they believe in what their president wants to do.

"Trump can handle all that stuff. All we have to do is support him. He knows what he's doing. He's been a businessman all his life," said Palota Taamu Seupelu, who made the trip from Hawaii to attend the inauguration.

"If tariffs work, then more power to him," said Bill George of West Virginia, who was in a jovial and festive mood near Capitol Hill celebrating Trump's return to the White House.

The tariff threat could make it tougher for the industry to attract more investors from New York and other financial centres, which has been a challenge for several years because of environmental concerns, financial performance, export limitations and government policy.

The Canadian oilpatch had one of its best years on record in 2024 as oil production reached historic highs and exports to the U.S. set new records.

The sector was anticipated to grow further in 2025, but those forecasts are now in doubt as oil and natural gas companies face so much uncertainty with possible tariffs.

"I don't think they're necessarily pulling back, but I think they'll be taking a wait-and-see attitude," said Legge, about investment decisions and whether to grow production.