Trump’s Tariffs on Canadian Oil: Scotiabank Says It’s a Buying Opportunity

Scotiabank Calls Tariff Fallout a ‘Short-Term Pain, Long-Term Gain’ for Canadian Oil Investors

Editorial Team (ET)July 10, 2025

The oil and gas sector in Canada is facing yet another challenge as former U.S. President Donald Trump enacts a 10% tariff on all energy imports from Canada. Despite the immediate market uncertainty, Scotiabank Global Equity Research sees this as a temporary setback—and a chance for investors to buy Canadian oil and gas stocks at a discount.

Trump’s Tariff Move: A Short-Term Hit?

Over the weekend, Trump announced a sweeping 25% tariff on nearly all Canadian goods, sparing energy products with a lower 10% levy. Canada’s immediate countermeasure includes retaliatory tariffs on U.S. imports, with economic and political implications yet to unfold.

Scotiabank analysts, led by Jason Bouvier, believe these tariffs won’t last long, as rising energy costs will quickly become unpopular among American consumers. For investors, the dip in Canadian energy stocks could be an ideal entry point.

Who Gets Hit the Hardest?

Canadian oil producers with limited exposure to non-U.S. markets are expected to bear the brunt of the tariffs. With about 71.50 USD per barrel for WTI crude and a 15 USD discount on Western Canadian Select, Scotiabank estimates that the tariff will cost producers about 5.60 USD per barrel. The bank highlights three companies most exposed to this policy:

Athabasca Oil Corporation (ATH.TO)
Cenovus Energy (CVE.TO)
MEG Energy (MEG.TO)

Despite these headwinds, Scotiabank insists that investors should see share price dips as a buying opportunity.

Trans Mountain Pipeline: A Strategic Shift?

With the U.S. market becoming less attractive, Canadian producers might shift focus toward non-U.S. markets using the newly expanded Trans Mountain pipeline. There’s also the potential for re-exports through the U.S. Gulf Coast, though the logistics of this remain complex.

While Canada heavily relies on the U.S. for energy exports, this situation may accelerate a long-term push for diversification, reducing dependence on a volatile U.S. trade policy.

Big Oil’s Take: “Mutually Beneficial” Trade

Calgary-based Imperial Oil (IMO.TO), majority-owned by ExxonMobil (XOM), kicked off earnings season last Friday, voicing concerns over tariffs hurting both economies. CEO Brad Corson emphasized the interdependence of the U.S.-Canada energy system, suggesting tariffs could backfire on American consumers.

Meanwhile, Suncor Energy (SU.TO) is set to release its earnings this week, with analysts watching closely for comments on how the company plans to navigate the new tariffs. RBC and Scotiabank recently named Suncor and Imperial as their top picks due to their strong refining operations within Canada, which offer a degree of insulation from tariff impacts.

Investor Takeaway: A Rare Buying Opportunity?

Despite the initial market reaction, experts believe the tariffs will be short-lived, making this an opportunistic buying window for certain Canadian energy stocks. Companies like Athabasca, Cenovus, and MEG Energy face short-term pricing pressure, but for long-term investors, these dips could be a chance to enter the market at a discount.

With oil prices expected to stay strong in 2025, and Canada looking to expand its non-U.S. export options, the current volatility might just be a stepping stone to future growth.

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