Canada is accelerating plans to expand oil and liquefied natural gas exports to global markets, as Trump’s tariff war and the war on Iran expose the risks of relying heavily on its southern neighbor for trade and energy security.
Prime Minister Mark Carney’s government is seeking to reduce Canada’s dependence on the United States by expanding pipeline infrastructure and strengthening energy ties with Asian buyers, marking a shift in a country long reluctant to embrace its role as a major fossil fuel exporter.
The proposed Pacific Link pipeline, designed to transport 1 million barrels of oil per day from Alberta to Canada’s west coast, is central to that strategy.
Carney announced plans to fast-track approvals for the project earlier this month, with construction expected to begin next September, according to Energy Minister Tim Hodgson.
Estimated to cost between C$35.2 billion and C$43.7 billion, the pipeline would expand Canada’s Pacific export capacity and improve access to Asian markets beyond its established US customer base.
The country produced more than 6 million barrels of oil per day in 2025, but roughly 90% of its oil exports went to the United States, where refineries are configured to process Canadian heavy crude.
Although the arrangement has benefited both countries for decades, deteriorating bilateral relations have exposed the costs of that dependence.
Washington imposed 50% tariffs on $20 billion in Canadian imports in August after trade negotiations collapsed, prompting retaliation from Ottawa, even as Trump said on Sunday that a deal was approaching.
Energy has largely escaped the harshest tariff measures, but the dispute has reinforced concerns that Washington can use its economic leverage to pressure its closest trading partners.
“We don't intend to trade less with the United States, we just intend to trade a lot more with other people,” Hodgson said.
Meanwhile, disruption to energy shipments through the Strait of Hormuz has strengthened the case for alternative suppliers, particularly among Asian importers seeking to diversify away from the Middle East.
Canada’s Pacific coastline offers a strategic advantage, with shipments to major Asian markets such as China and Japan taking roughly two weeks.
Ottawa expects oil production to increase by 2 million to 2.5 million barrels per day over the next five to seven years, while liquefied natural gas exports could reach 50 million metric tons annually by 2030, up from about 14 million currently.
However, those ambitions face significant financial and industrial obstacles.
Rory Johnston, founder of Toronto-based consultancy Commodity Context, forecasts more modest oil production growth of 100,000 to 150,000 barrels per day annually over the next decade, citing uncertainty over oil prices and investment.
Canada’s heavy crude also commands lower prices than lighter grades and requires additional processing and dilution, complicating efforts to compete in international markets.