With incoming U.S. president Donald Trump threatening to wallop Canadian products with a 25 per cent tariff, it might sound enticing for the country to use its biggest export item as leverage.

But international trade analysts and energy experts say Canada would be playing a risky game if it imposes export taxes or restricts the flow of oil, natural gas or electricity to the U.S. as part of a broader trade dispute.

“Using the hockey analogy, why score a set of goals on your own team? It is, quite frankly, the dumbest thing I’ve ever heard,” Fen Hampson, an international affairs professor at Carleton University and co-chair of the Expert Group on Canada-U.S. Relations, said Tuesday.

“If Trump puts the tariff on it, American refiners and consumers are going to scream because they’re going to see it in the pocketbook. Let them do the yelling for us.

“Making the situation worse by sending a message that we’re ready to jeopardize security of supply — that would be totally the wrong message to send.”

Canada and the U.S. are the largest foreign suppliers of energy to each other, and the system remains highly integrated.

Energy trade between the two countries was worth US$152 billion in 2023, according to the U.S. Energy Information Administration, weighing heavily in Canada’s favour.

The combined value of Canadian energy — including electricity, oil and gas — shipped into the U.S. reached $125 billion, while the Americans sent $27-billion worth of energy north.

Canadian oil exports continue to climb, reaching a record 4.42 million barrels per day last week, making up 69 per cent of all imports to the U.S., Reuters reported.

Some analysts anticipate energy will ultimately be exempted from tariffs because it would cause American fuel costs to rise, but after meeting with Trump last weekend, Premier Danielle Smith believes there will be no exceptions.

That leads to the question of how Canada should best respond to tariffs, something the premiers discussed with Prime Minister Justin Trudeau in Ottawa on Wednesday.

Speaking to reporters before the gathering, Newfoundland and Labrador Premier Andrew Furey compared Canadian energy to the queen in the game of chess. “We need to make sure that it is protected . . . and you never take the queen out too early.”

Ontario Premier Doug Ford, who has previously spoken about cutting off electricity exports to the U.S., argued for “keeping every tool in our toolbox.”

But then there’s reality.

Energy economist Peter Tertzakian said Canada lacks full energy independence, marked by the inability to easily ship Canadian oil and natural gas to all regions of the country.

Western Canadian oil flows via pipeline through the U.S. and then back into Ontario, while natural gas also moves in both directions, although much more heads south.

“Do we have energy independence in Canada? Well, no,” said Tertzakian.

“We don’t have an east-west pipeline of any consequence, so the oil that we send to Central Canada transits through the United States. The majority of oil that Central Canada gets is from the United States . . . We don’t want to get into an energy tit-for-tat because they have a lot more levers to pull than we do.”

The U.S. sent 355,000 barrels of oil per day into Canada in 2023, with light crude imported into Eastern Canada refineries that aren’t configured to run heavy crude or because they lack pipeline access to western Canadian oil, according to the Canada Energy Regulator.

“We can’t panic,” said Canada West Foundation CEO Gary Mar, Alberta’s former representative to the U.S.

“Talking about putting an embargo on Canadian oil going to the United States doesn’t make any sense . . . We can’t just shut down the oilsands, because we don’t have any place to store it.”

Key questions about U.S. tariffs still need to be answered to determine the effect on energy trade.

This includes how large the levy is and if it is applied to Canadian oil and gas being re-exported out of the U.S. to other countries, said James Coleman, a law professor who specializes in North American energy infrastructure at the University of Minnesota.

Also unclear is the appetite of the administration to negotiate a deal with Canada, or if it simply will use tariffs as a tool to raise revenue against a largely captive seller, said Coleman, a former University of Calgary professor.

However, suggestions to cut off oil exports would be self-defeating, as western Canadian oil moves through Enbridge’s Line 5 to Ontario, via Michigan, and interrupting those energy flows would also squeeze Canadian consumers, he said.

“It makes zero sense. As an initial matter, how is Ontario supposed to get its oil?” Coleman said.

“It’s not to say that an ugly energy fight wouldn’t be terrible for the U.S. economy as well. It would be but, ultimately, the U.S. has escalation dominance. Ultimately, that trade ends up worse for Canada, however unfair that may be.”

Instead, it may make strategic sense for Alberta to consider curtailment and adopt measured production quotas — as it did in 2019 and 2020 — to prevent the discount on Canadian heavy oil from significantly expanding, he added.

Tertzakian notes curtailment caps growth. He’s also not convinced an increase in gasoline prices will cause the U.S. to suddenly change course, saying it’s better to seek common ground on North American energy development.

Strengthening Canada’s energy independence — and recognizing the perils of having one customer for the vast majority of oil and gas exports — is also required.

“We’ve been thinking about this since the 1950s, 75 years of waffling, and we’re still not energy independent,” Tertzakian said. “But maybe this is the wake-up call that we need.”

Instead of threatening to cut off energy, Hampson believes the federal government should look at retaliatory tariffs on discretionary consumable items Canadians buy from the U.S., such as wine or digital streaming services.

It could put on a travel tax to discourage Canadians from vacationing in states such as Florida or Nevada, or look at axing tax deductions for businesses advertising on large U.S. tech platforms.

“We’re the smaller party, they’re the bigger party,” said Hampson.

“If we want to retaliate, we shouldn’t do tit-for-tat because that’s just plain dumb, certainly when it comes to energy. And there are other levers we could pull.”

Chris Varcoe is a Calgary Herald columnist.

cvarcoe@postmedia.com