There is a simple rule in business that I learned a long time ago.
If you only have one customer, you don’t really have a customer.
You have a boss.
For decades, Canada has had one enormous customer sitting right beside us.
The United States.
It was convenient.
It was profitable.
And for a long time, it made perfect sense.
Why spend billions building ports, pipelines and trade relationships halfway around the world when the richest market on Earth was sitting across the border?
Then Donald Trump came along and taught Canadians a rather expensive lesson.
Convenience and security are not the same thing.
And Canada has finally started doing something about it.
THE CLAUSE MOST CANADIANS HAVE NEVER HEARD OF
Go back to the original Canada-U.S. free trade era and later NAFTA.
There was something buried in those agreements called the energy proportionality clause.
It is sometimes described much too simply as Canada being required to send a fixed percentage of its oil to the United States.
That’s not quite what it did.
The actual provision dealt with government restrictions on energy exports.
If Canada restricted exports of an energy product, American customers had to retain access to a proportionate share based on recent trade.
The provision was never actually invoked.
But politically, it mattered.
Canada had formally accepted limits around how it could restrict energy flowing south.
Then Trump decided NAFTA was the worst trade agreement mankind had apparently devised since somebody traded a cow for three magic beans.
He demanded a new agreement.
Canada negotiated one.
And something rather important disappeared.
The energy proportionality clause.
CUSMA contains no equivalent requirement.
The Government of Canada describes its removal rather plainly…
It reaffirmed Canada’s sovereignty over its own energy resources.
That’s a hell of an important sentence today.
THEN CANADA BUILT A SECOND DOOR
For decades, Canada’s oil business had another problem.
We could produce enormous quantities of the stuff.
Getting it somewhere other than the United States was another matter.
Our infrastructure overwhelmingly pointed south.
Then came the Trans Mountain Expansion.
The expanded system increased capacity from roughly 300,000 barrels per day to 890,000 barrels per day.
And it reaches tidewater at Burnaby, British Columbia.
That means Canadian oil can get onto ships.
And ships can go somewhere other than America.
Trans Mountain’s expanded system began commercial operations in May 2024.
Before the expansion, less than 3% of Canadian crude exports went to countries other than the United States.
That figure has since climbed to roughly 10%.
Still small?
Absolutely.
But that’s not the important part.
The important part is that the door exists.
THAT’S WHAT LEVERAGE LOOKS LIKE
We’ve spent months talking about leverage around here.
This is it.
Leverage isn’t standing behind a podium threatening somebody.
Leverage is being able to say…
No thanks. We have another buyer.
Canada still sells the overwhelming majority of its crude oil to the United States.
That isn’t going to change tomorrow.
Nor should Canadians pretend America suddenly doesn’t matter.
They’re our neighbour.
They’re a gigantic market.
Our economies have been integrated for generations.
But there’s an enormous difference between saying…
We want to sell to you.
And saying…
We have to sell to you.
One is trade.
The other is dependence.
NOW WE’RE TALKING ABOUT ANOTHER WEST COAST PIPELINE
And here’s where this story becomes considerably bigger.
Canada and Alberta are now advancing work around another proposed West Coast oil pipeline designed specifically to increase access to Asian markets.
The federal government describes the objective clearly…
Diversify Canadian exports into new and growing Asian markets.
Think about where we’ve travelled in a relatively short period.
For decades, most of the plumbing pointed south.
Now Trans Mountain gives us substantial Pacific access.
Another westbound pipeline is being explored.
LNG export capacity is developing.
Canadian governments are talking openly about diversifying trade.
And the entire conversation around our natural resources has changed.
This isn’t anti-American.
It’s pro-Canadian.
AMERICA CAN STILL BE OUR BEST CUSTOMER
I hope it is.
I’d love to see the United States remain one of Canada’s closest friends and biggest trading partners for another hundred years.
But friendship doesn’t require dependence.
And recent events have demonstrated why Canada would be foolish to build its economic future around the assumption that Washington will always behave predictably.
Governments change.
Presidents change.
Policies change.
Tariffs appear.
Deals get threatened.
Political relationships deteriorate.
Infrastructure lasts for generations.
That’s why pipelines matter.
Ports matter.
Railways matter.
Electricity interties matter.
LNG terminals matter.
Trade agreements matter.
And that east-west infrastructure I’ve been yammering about matters.
Because every additional route gives Canada another option.
WE BUILT NORTH-SOUTH BECAUSE IT WAS EASY
And let’s be fair to the Canadians who came before us.
They weren’t idiots.
The United States was right there.
It was wealthy.
It needed what we produced.
Selling south was logical.
But that convenience gradually became concentration.
Canada became very good at producing things the world wanted while remaining surprisingly bad at getting those things to the world.
Oil.
Natural gas.
Critical minerals.
Potash.
Uranium.
Electricity.
We have the inventory.
What we’ve often lacked are enough checkout lanes.
That’s what has to change.
CANADA DOESN’T NEED TO BEAT AMERICA
This is where I part company with the idea that Canada somehow has to “outsmart” the United States.
I don’t give a damn who wins some imaginary Canada-versus-America chess match.
I want Canada to become harder to push around.
There’s a difference.
We don’t accomplish that by shouting louder than Trump.
We accomplish it by building.
Another pipeline.
Another port.
Another LNG terminal.
Another electricity connection between provinces.
Another European customer.
Another Asian customer.
Another trade agreement.
Another Canadian industry capable of processing our own resources instead of shipping everything somewhere else to have the value added there.
One option becomes two.
Two becomes five.
And suddenly the fellow threatening to walk away from the table discovers something uncomfortable.
So can we.
THAT MAY BE THE BIGGEST CANADIAN LESSON OF THIS WHOLE MESS
Donald Trump didn’t invent Canada’s dependence on the American market.
That relationship was built over generations.
But he exposed the risk in it.
Maybe we’ll eventually look back at this period and realize that was the strange gift buried inside all the chaos.
Canada stopped assuming the United States would always be there under the same terms.
We started looking east.
We started looking west.
We started looking across the Atlantic.
We started looking across the Pacific.
And perhaps most importantly, we started looking at each other.
At what Canada already produces.
At what Canada can build.
And at what Canada could become if we finally connect the bloody pieces.
Because sovereignty isn’t declaring that nobody can tell you what to do.
Sovereignty is having enough options that when somebody tries...
you can afford to say no.
The Recap…
For decades, Canada’s economy was built around one enormous customer… the United States.
CUSMA removed NAFTA’s old energy proportionality provision. Trans Mountain opened much greater access to overseas oil markets. And Canada is now pursuing even more export capacity.
That’s not abandoning America.
That’s making sure America is our customer… not our boss.
The Gut-Punch…
A country with one customer can be threatened.
A country with options can negotiate.
Canada needs more options.
Build the damn things.
Source credit:
This article was developed from research notes supplied from a third-party video transcript, with factual claims independently checked against Government of Canada, Global Affairs Canada and Natural Resources Canada information.
If you enjoy thoughtful conversations, Canadian stories, and the occasional smart-ass observation about the world we’re living in, you’re in the right place.
Subscribe free and get new stories, insights, and observations delivered directly to your inbox.
No paywall.
No spam.
No nonsense.
Leave anytime with a single click.
I promise not to take it personally.
Well said, Fred
I am totally with you on this. It matters that we can stand independently. And it certainly does not matter who the pundits decide wins. We are fundamentally changing our economy. Much for the better. Getting better “deals” with other countries that also build Canada. That’s what matters now.