# Why Trump's Canada math comes down to oil

> The $27.3 billion trade gap with Canada is mostly one product Midwest refineries cannot replace.
- Title: Why Trump's Canada math comes down to oil · Fortune | Shortify
- Summary: The $27.3 billion trade gap with Canada is mostly one product Midwest refineries cannot replace. The US trade deficit with Canada is not evidence of…
- Keywords: trade, canada, tariffs, oil, usmca, Trump's, math, comes, Fortune
- Source: Fortune — https://fortune.com/2026/09/12/trade-deficit-canada-tariffs-trump-alberta-oil-imports-discount-midwest-refineries
- Author: Paul Wiseman
- Read time: 2 min
- Topics: trade, canada, tariffs, oil, usmca
## An odd target
No country buys more from the United States than Canada, and it is second only to Mexico as a market for American farmers. Most US goods cross the border duty-free.
## Trump sees a predator
He says America has been ripped off for 50 years, and he has floated pulling out of the very three-way pact he signed with Canada and Mexico in 2018.

> America has been "ripped off for 50 years by Canada"
## Talks collapsed in August
After negotiations broke down Aug. 21, Trump attacked Canada's leaders personally, revived the 51st-state taunt and ordered Lake Ontario renamed "Lake America."
## Then came the tariffs
Trump hit $20 billion of Canadian goods with 50% tariffs. Canada retaliated, and he moved to ban whey, most alcohol, motorcycles and mopeds while sparing toilet paper and fishing rods.
## Canada is the open one
Trade equals 64% of Canada's output versus 25% for America. Heritage ranks Canada 14th on economic freedom and the US 22nd. Its tariff rate on US goods was 2.4%, against America's 5%.
## Two or three closed sectors
Lawyer Barry Appleton calls Canada modestly protected with a few genuinely shut markets. Lumber subsidies are a decades-old US complaint that Canada denies.

> a modestly protected economy with two or three genuinely closed sectors
## Dairy is the real wall
Above quota, Canadian tariffs top 200% on most dairy and near 300% on butter. Wisconsin alone makes more milk than all of Canada, so open borders would swamp Canadian farms.

> would make a Soviet commissar blush
## America wins on dairy anyway
USMCA traded continued supply management for more access, and it worked. US dairy exports to Canada rose 11% last year, and America runs a $1.3 billion to $585 million surplus.
## One industry explains the gap
The $27.3 billion deficit traces almost entirely to crude. Canada shipped more than $85 billion of oil south in 2025, and it sells at a discount to the US benchmark.
## Midwest refineries have no substitute
Plants there are engineered for heavy sour crude from Alberta's oil sands. Switching feedstock would take years and billions of dollars.

> It's the only oil they can use. They can't use Texas crude. They can't use Venezuelan crude.
## A standoff with a deadline
Canada sends 70% of its exports south, and America needs the oil, potash and border electricity. The import ban does not bite until Sept. 29, leaving room to talk.

> This is like having a very bad standoff with your 14-year-old. Nobody's happy in this game.
## Key takeaway

The US trade deficit with Canada is not evidence of cheating, it is the price of heavy crude that Midwest refineries are physically built to run.