A natural gas pipeline crossing a river on a suspension bridge in Southern Alberta, Canada, circa December 2024. As relations with Washington cool, Canada is accelerating pipeline development to reach new energy markets. (Shutterstock/Ramon Cliff)

How US-Canada Tensions Are Driving Canada’s Oil and Gas Pipeline Strategy

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Canada is expanding its oil and natural gas pipeline infrastructure to diversify energy exports and reduce reliance on the United States. 

The structure of global energy is changing. The Iran war, artificial intelligence (AI) energy demands, and the development of non-Middle Eastern oil and gas production facilities indicate that governments, businesses, and consumers face a quickly changing landscape. One dimension of this is the deterioration of US-Canadian relations and the related push by Canada to derisk as much as possible from its heavy reliance on US energy infrastructure and develop deeper market penetration in Asia. While this development should not be overstated, considering the role of geography, Canada’s moves to decrease its dependence on the United States herald a much more complicated relationship between the two countries, as well as raising geopolitical concerns over the role of China, one of the world’s largest buyers of energy.  

US-Canada Relations Deteriorate Under Trump 

US-Canadian relations have generally been positive, having a shared colonial heritage and being allies in two world wars and the Cold War. There are also longstanding trade agreements, including the Canada-United States Free Trade Agreement (1987/88), the North American Free Trade Agreement (NAFTA) (1994), and the US- Mexico-and-Canada Agreement (USMCA), the extension of which is under negotiation. Canada and the United States also have a number of other agreements regarding continental defense and foster trade and cooperation in maintaining one of the world’s longest undefended borders. Longtime US Canada watcher Christopher Sands reflects: “A US ally, security partner, economic coworker, foreign direct investor, and co-innovator, it is more important than many Americans realize particularly as bilateral relations have shifted gradually to include the direct involvement of more than 40 US federal department representatives at the US Embassy in Ottawa.” 

That has changed under the Trump administration. The United States has declined to renew the USMCA for another 16 years (though trade talks continue); the US president, angered by Canada’s forest fires which are causing considerable pollution south of the border, threatened to impose new tariffs and demand financial damages from its northern neighbor; and President Donald Trump has quipped that the United States should host the World Cup again, but this time without Canada and Mexico. Furthermore, the US........

© The National Interest