The expansion of Canada’s Trans Mountain pipeline could play a pivotal role in mitigating the potential impacts of tariffs threatened by President-elect Donald Trump on imports from Canada and Mexico. The $24 billion project adds nearly 600,000 barrels per day (bpd) of shipping capacity for Canadian crude, crucial as energy products account for about one-third of Canada’s exports to the U.S.
Tariffs would not apply to crude transshipped through the U.S. to other destinations, hinting they may serve more as leverage in negotiations than as enforceable trade measures. With an export terminal in Vancouver capable of handling 630,000 bpd — around 16% of total Canadian oil exports — the pipeline facilitates bypassing the U.S. market to avoid tariffs. However, cost overruns have limited spot shipments, leaving the pipeline underutilized. Government projections suggest full capacity will not be reached until 2028. U.S. refiners, especially in the Midwest and on the West Coast, rely heavily on Canadian crude, making them vulnerable to tariff impacts.
Of note: Canadian wheat to Mexico transshipped through the U.S. would also not be impacted by any tariffs.
