Varcoe: As Trump weighs tariffs on Canadian oil, concern mounts over 'investment drift' into U.S.
'These types of tariffs and these types of trade wars are not good for anybody and, particularly for Canada, it can have an impact of not being able to grow the industry'

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Alberta has spent years setting the table to expand the petrochemical sector, and more than $35 billion of proposed projects are in the hopper for consideration under a provincial incentive program.
However, the threat of U.S. tariffs on all imports from Canada — potentially being imposed as early as Saturday — could disrupt big-ticket investments across the country, as companies try to assess the potential damage of a messy trade dispute with our largest trading partner.
Aside from the massive export of natural resources, other value-added products — including petrochemicals — cross the border daily and could be hit by Donald Trump’s pledge to place a 25 per cent levy on imports from Mexico and Canada.
“It can be very impactful. We in Canada already have some competitive disadvantages with regards to attracting investments,” Rocky Vermani, chair of the Chemistry Industry Association of Canada and a senior vice-president at Calgary-based Nova Chemicals, said in an interview last week.
“These types of tariffs and these types of trade wars are not good for anybody and, particularly for Canada, it can have an impact of not being able to grow the industry.”
On Thursday, Trump turned up the heat again on the trade front, telling reporters he intends to put 25 per cent tariffs on Canada and Mexico on Saturday, but hasn’t decided if it will include oil imports.
“It depends on what the price is. If the oil is properly priced, if they treat us properly, which they don’t . . . Mexico and Canada have never been good to us on trade.”
Canada is the largest supplier of foreign oil to the U.S., shipping more than four million barrels per day to the country.
Cross-border trade is essential for both countries, with $3.6 billion of goods moving between the two countries daily, but a 25 per cent tariff would shrink the country’s GDP by an estimated 2.6 per cent, according to the Canadian Chamber of Commerce.
Even the threat of a tariff is already creating uncertainty, weighing on business confidence and investment intentions, the Bank of Canada said Wednesday in a new monetary policy report.
“Tariffs pose a significant threat to capital investment in Canada by disrupting trade-dependent industries,” said Jessica Brandon-Jepp of the Canadian Chamber of Commerce.
When faced with uncertainty, companies eyeing significant investments will move cautiously.
“There’s a danger of that, for sure. And, to be honest with you, that’s part of the point of tariffs from President Trump’s perspective, is to create these incentives for people to actually do business and create jobs in the United States,” federal Natural Resources Minister Jonathan Wilkinson said Wednesday in an interview.
“This is why we truly need to try to sort this tariff issue out quickly . . . (so) everybody knows the rules of the game, and you don’t have that kind of foreign investment drift into the United States.”

After global oil prices tanked last decade, provincial governments under the NDP and UCP created incentive programs to attract major petrochemical investments that would add value to natural resources and help diversify the economy.
Several new facilities moved forward, including Inter Pipeline’s Heartland polypropylene plant in Strathcona County, which started up in 2022. Today, Dow’s $10-billion net-zero petrochemical project is under construction in Fort Saskatchewan.
Other major projects are in the planning stages.
Alberta’s Industrial Heartland Association estimates the total value of major projects being studied for the region northeast of Edmonton, but not yet approved, at about $17 billion.
“Tariffs are a headwind for capital investments,” association executive director Mark Plamondon said in a statement.
“For investors making multibillion-dollar investment decisions with the purpose of exporting to American markets, added tariff costs can substantially impact project economics.”
Under the Alberta Petrochemicals Incentive Program, the province provides grants worth up to 12 per cent of the capital expenses for an eligible project.
According to Alberta’s energy department, 15 applications are in various stages of the approval process, representing $37 billion in potential investment. If built, these developments would create more than 1,600 permanent jobs.
Several proposed projects in Alberta are in the hydrogen-ammonia export business, and they would send clean energy to markets such as Japan and South Korea, noted Greg Moffatt, CEO of the Chemistry Industry Association of Canada (CIAC).
However, the existing Canadian and U.S. chemistry industries remain interconnected.
“It’s hard to understand what the short-term impacts are going to be on our industry,” he said of tariffs.
“But it is going to be painful.”

In 2023, the chemical sector in Alberta directly employed more than 8,500 people and exported more than $10 billion of products, with 89 per cent shipped to the U.S.
Data from the association shows $4.2 billion of plastic resin and plastic products from Alberta were exported into all U.S. states, but the main destinations included Texas, Michigan and Illinois.
The Canadian and U.S. petrochemicals industry is integrated with raw products flowing back and forth across the border, Vermani said.
For example, Nova Chemicals makes polyethylene, which requires ethane, a component of natural gas.
The company operates ethylene and polyethylene production complexes at its facilities in Joffre.
Nova imports ethane from North Dakota to supplement its supply from Western Canada, while its facilities in the Sarnia, Ont., region receive ethane from the Marcellus region in the U.S. Vermani estimates 50 to 60 per cent of Nova’s production from Canada crosses the border.
Any tariffs would have a significant impact on Nova’s business, he said.
“If there are retaliatory tariffs that the Canadian government comes out and puts on, that becomes an even more complex situation for us.”
It seems increasingly clear that pulling jobs and investment into the United States is part of Trump’s broader trade strategy.
And, it appears, we will soon find out if tariff talk shifts from being a threat to reality.
Chris Varcoe is a Calgary Herald columnist.
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