Canada Supplies 63% of U.S. Crude Imports and 81% of Imported Power — Economists Warn Using That Leverage Has a Price

35,000+ smart investors are already getting financial news, market signals, and macro shifts in the economy that could impact their money next with our FREE weekly newsletter. Get ahead of what the crowd finds out too late. Click Here to Subscribe for FREE.

Energy leverage is most powerful when both sides know it exists. In 2025, Canada supplied 63.4% of all crude oil imported by the United States and 81.3% of its imported electricity, turning pipelines and transmission lines into strategic assets as well as commercial infrastructure.

Yet those percentages describe two very different dependencies. Canadian heavy crude is deeply embedded in the economics of many U.S. refineries, particularly in the Midwest, while imported Canadian electricity represents a relatively small share of total U.S. generation but can become significantly more important in particular regions during periods of extreme demand. As Canada-U.S. trade tensions intensify, economists warn that restricting those flows could hurt American consumers and businesses while simultaneously costing Canadian producers revenue, encouraging competing suppliers and weakening Canada’s reputation as a dependable energy partner.

The Headline Numbers Are Real — but They Need Context

The scale of Canada’s role in American energy imports is difficult to overlook. Canada Energy Regulator data show that Canadian crude accounted for 63.4% of U.S. crude imports in 2025. Canada exported roughly 4.3 million barrels of crude per day overall that year, with about 3.9 million barrels per day, or 90.1%, going to the United States. Canadian electricity was even more dominant within its category, accounting for 81.3% of electricity imported by the U.S. Canada exported 32.7 terawatt-hours of power south of the border, worth approximately C$3.3 billion.

The electricity percentage, however, can sound more dramatic than the underlying dependence. The United States generated roughly 4,430 terawatt-hours of electricity domestically in 2025. Canada’s exports therefore represent a very small amount compared with total American generation, even though Canada dominates the narrower category of imported power. Oil is different. Millions of Canadian barrels move into U.S. refineries every day through infrastructure built around that trade, making replacement substantially more complicated.

Why Canadian Heavy Crude Is Hard to Replace Quickly

Canada does not merely supply a large quantity of oil to the United States; it supplies a type of crude that fits an important part of the American refining system. In 2024, about 79% of Canada’s crude exports were heavy oil. Many refineries in the U.S. Midwest and Gulf Coast have sophisticated equipment capable of processing heavy, high-sulphur crude and diluted bitumen from Canada’s oil sands. The Canada Energy Regulator specifically identifies those regions as major markets for Canadian heavy barrels.

That matters because much of the crude produced domestically in the United States is lighter. American refiners can buy alternative heavy grades from other countries, but changing suppliers is not as simple as replacing one barrel with another overnight. Quality, transportation costs, pipeline access and refinery configurations all influence what a replacement barrel is worth. BMO Economics has noted that the unusual combination of lighter U.S. production and refineries built to handle heavier grades helps explain America’s continued appetite for Canadian crude. Canada’s advantage therefore comes not only from volume, but from how closely its oil fits existing U.S. infrastructure.

The Midwest Is Where Canada’s Oil Leverage Is Strongest

The vulnerability is especially concentrated in the American Midwest. Canada sent approximately 2.47 million barrels of crude per day to the U.S. Petroleum Administration for Defense District 2 in 2024, representing 63% of all Canadian crude shipped to the United States that year. Major systems such as the Enbridge Mainline connect western Canadian production directly to Midwestern refineries, creating supply relationships that have developed over decades.

Geography makes those refineries more exposed than facilities along the American coasts. A Gulf Coast or West Coast refinery can potentially bring alternative oil in by tanker. Many Midwestern facilities have much more limited access to overseas barrels. BMO Economics estimated that roughly 70% of Canadian crude exports to the United States during the first ten months of 2024 went to Midwest and Rocky Mountain refiners, where substitute supplies are harder to reach. But leverage cuts both ways. If Canadian barrels were deliberately restricted, producers could be forced to find buyers elsewhere, potentially widening the discount on Canadian heavy oil and shifting part of the economic pain back onto Alberta’s industry.

Electricity Leverage Is Regional Rather Than Nationwide

Electricity tells a more geographically uneven story. Canada’s 81.3% share of U.S. electricity imports does not mean American cities receive 81% of their electricity from Canada. Nationally, the United States produces vastly more power domestically than it imports. The consequences of disrupting Canadian electricity would therefore depend heavily on location, season and conditions on the grid rather than producing a uniform national shock.

New England illustrates the difference. During January 2025, when winter electricity demand peaked in the region, Canadian power supplied an average of 14% of demand in the ISO New England system. Across the first eight months of that year, however, Canada’s average contribution was only 5%. New York offered another example during the July 2026 heat wave. On July 3, the state imported 52 gigawatt-hours from Canada, the largest daily Canada-New York exchange since January 2025, with some electricity moving through the newly opened Champlain Hudson Power Express linking Quebec with New York City. Losing Canadian imports during moments like these could raise costs and tighten reserve margins without necessarily plunging the broader United States into darkness.

The Cross-Border Grid Works in Both Directions

Canada’s power relationship with the United States is not a one-way flow from northern dams to American customers. Canada also imports substantial amounts of electricity, particularly when drought, maintenance, market prices or seasonal demand make American supply attractive. The Canada Energy Regulator oversees 86 international power lines, reflecting a system designed around continuous cross-border balancing rather than permanent dependence by only one side.

Recent drought conditions have demonstrated why that flexibility matters. Canadian electricity imports rose to 23.21 terawatt-hours in 2024 as low precipitation reduced hydroelectric availability in provinces including Quebec, Manitoba and British Columbia. Some regions can export large volumes during periods of strong hydro production and import power when reservoir conditions deteriorate. Economist Kent Fellows of the University of Calgary’s School of Public Policy has emphasized this two-way reality when discussing proposals to weaponize electricity trade. Restricting exports could hurt particular American markets, but retaliatory restrictions or the loss of access to competitively priced U.S. power could create problems for Canadian provinces as well.

Canada Has Its Own Energy Dependencies to Protect

The oil relationship contains similar vulnerabilities. Although Canada is one of the world’s major crude producers, it still imported about 506,000 barrels of crude per day in 2025, with 75.6% coming from the United States. Geography explains part of the apparent contradiction: western Canada produces enormous volumes, while some eastern refineries can economically access U.S. crude through existing transportation networks.

There is also an important dependency hidden inside oil-sands production itself. Canada imported 485,000 barrels per day of refined petroleum products in 2025, and 79.6% came from the United States. Alberta alone imported approximately 200,000 barrels per day, much of it condensate. That lighter hydrocarbon is blended with thick oil-sands bitumen so it can move through pipelines. Meanwhile, Canada’s hydrocarbon exports to the United States were worth C$157.5 billion in 2025, equal to 20.2% of the country’s goods exports worldwide. Restricting energy therefore would not amount to turning off a tap with consequences only on the southern side of the border. Canadian government revenues, producers, workers, pipeline systems and import-dependent regions would also be exposed.

Trans Mountain Has Given Canada More Room to Maneuver

Canada is less trapped by north-south oil infrastructure than it was only a few years ago. The Trans Mountain Expansion entered service in May 2024 and nearly tripled the system’s capacity to about 890,000 barrels per day. The project increased western Canada’s crude-export pipeline capacity by approximately 13% while expanding western tidewater export capacity by roughly 700%, allowing far more barrels to reach ships headed for markets beyond the continental United States.

The effect became visible quickly. Statistics Canada reported that crude exports to countries other than the United States surged 132.6% in 2025 to 27.2 million cubic metres. Non-U.S. destinations captured 10.9% of total Canadian crude exports, more than triple the 2.8% average recorded between 2016 and 2024. U.S.-bound exports fell 4% during the year. That is meaningful diversification, but not independence: close to nine out of every ten Canadian export barrels still went to the United States. Trans Mountain has strengthened Canada’s negotiating position by creating another outlet, yet replacing the enormous U.S. market would require considerably more infrastructure, customers and time.

Economists Warn That Weaponizing Energy Could Hurt the Seller

The strongest warnings against using energy as a trade weapon focus on what happens after the immediate confrontation. Kent Fellows has noted that electricity dependence can operate in both directions, while energy analyst Heather Exner-Pirot has warned that deliberately disrupting established energy flows carries practical, economic and political consequences. A central concern is Canada’s reputation. Energy customers value supply security, and deliberately withholding a commodity can give buyers a reason to spend money finding substitutes.

Oil provides a particularly clear example. BMO senior economist Art Woo has argued that halting Canadian crude exports would be far more disruptive than simply absorbing a tariff. U.S. Midwestern refiners would face difficulty replacing Canadian heavy oil quickly, but coastal refiners have greater access to overseas suppliers. Canadian producers, meanwhile, could be forced to discount barrels to attract alternative customers. Prime Minister Mark Carney made a similar strategic argument in July when he played down restricting Canadian oil supplies, emphasizing the value of being regarded as a reliable supplier. Leverage can impose costs on a customer, but exercising it can also persuade that customer never to become as dependent again.

The Current Tariff Fight Shows How Retaliation Spreads Costs

The latest Canada-U.S. tariff escalation provides a real-time illustration of the economic trade-off. The United States imposed a 50% tariff on C$27.6 billion of Canadian goods effective August 22, 2026. Ottawa responded by announcing matching tariffs of 15%, 25% and 50% on C$27.6 billion of American imports beginning September 8, targeting sectors including steel, dairy, appliances, agricultural equipment, pulp and paper, plastics and electronics. The federal government also announced C$7.5 billion in additional support for affected Canadian workers and businesses.

Even targeted retaliation carries domestic costs. Oxford Economics estimates that the new American tariffs combined with Canada’s proportional response could leave Canadian GDP about 0.3 percentage points below its previous baseline in 2027 while raising consumer prices by roughly 0.3 percentage points. Those estimates do not model an energy cutoff, and they should not be treated as predictions of what an oil or electricity restriction would cost. They do demonstrate the underlying problem: measures designed to make the other country pay frequently travel through supply chains, investment decisions and consumer prices until businesses and households on both sides absorb part of the bill.

Canada’s Strongest Leverage May Be the Leverage It Does Not Use

Canada’s energy position unquestionably gives Ottawa negotiating power. The United States cannot instantly recreate millions of barrels of Canadian heavy crude arriving through established pipelines, and certain northern states value Canadian electricity most precisely when weather and demand place their grids under pressure. Those realities give American policymakers a reason to consider the consequences of allowing a broader trade dispute to engulf energy.

But dependence is not the same as immunity. Canada still sends the overwhelming majority of its crude exports south, imports American crude and petroleum products, relies on interconnected electricity markets and earns tens of billions of dollars from keeping those systems operating. The more durable strategy is therefore to increase Canada’s options rather than destroy existing ones. Trans Mountain has already shown how access to additional buyers can strengthen bargaining power without stopping U.S. shipments. Additional infrastructure, international customers and domestic trade capacity would deepen that advantage. Canada’s energy leverage is real, but its greatest value may come from making dependence on the United States less necessary while keeping Canadian reliability believable.

This Options Discord Chat is The Real Deal

While the internet is scoured with trading chat rooms, many of which even charge upwards of thousands of dollars to join, this smaller options trading discord chatroom is the real deal and actually providing valuable trade setups, education, and community without the noise and spam of the larger more expensive rooms. With a incredibly low-cost monthly fee, Options Trading Club (click here to see their reviews) requires an application to join ensuring that every member is dedicated and serious about taking their trading to the next level. If you are looking for a change in your trading strategies, then click here to apply for a membership.