CALGARY — For years, oil traders in Canada paid little mind to the paperwork needed to certify that the crude they were selling into the U.S. complied with the continental free trade agreement.

Commodities like oil that are exported over the Canada-U.S. border need special certification proving they originated in North America, thereby avoiding certain duties under the United States-Mexico-Canada Agreement (USMCA). For the traders collectively selling roughly US$300 million worth of Canadian crude into the U.S. every day, such certification was often low on the list of priorities, according to three people with knowledge of the oil trading industry. Traders sometimes wouldn’t fill out the necessary paperwork until weeks after a sale.

That changed in February, when U.S. President Donald Trump threatened to slap tariffs on products that didn’t comply with USMCA, purportedly in an effort to stem the flow of illegal fentanyl into the U.S.

Partly because of Canada’s “most favoured nation” status with the U.S., and partly because of crude oil’s relatively simple rules of origin (unlike other products like automotives, it doesn’t require a complicated assembly of parts from multiple suppliers), much of the oil Canada shipped into the U.S. had long flown under the radar. That meant a lot of the product crossing the border had been technically non-compliant with USMCA standards. 

Suddenly, in the face of 10 per cent tariffs on every barrel of crude they sold, traders working on behalf of Canada’s biggest oil producers had new motivation to dot their i’s and cross their t’s. 

“Prior to this USMCA exemption tariff, very little of Canadian crude trade was USMCA compliant, because you need to go through a certification process,” said Rory Johnston, founder of energy analysis firm Commodity Context. “But as soon as that tariff risk came on, they had a reason—a quantifiable, monetary reason—to go through the paperwork.” 

Securing the necessary USMCA paperwork is a straightforward process, and doesn’t require any major effort on the part of companies, according to Johnston and other experts. Those companies who found themselves non-compliant have virtually all since gotten certification, he said.

Yet, the rush to ensure compliance illustrates a wider uncertainty felt across many Canadian industries, as Trump’s efforts to reshape global trade have upended long-understood norms. 

Peter Tertzakian, the founder of Studio.Energy and a deputy director of Arc Energy Research Institute, said “there was a big scramble to register” under USMCA following Trump’s initial trade threats.

Johnston and Tertzakian learned about the matter directly from oil traders and companies they speak to as part of their regular research, and relayed their comments to The Logic. One former oil trader, whom The Logic agreed not to name as they are not authorized to speak to the media, also passed on comments directly from current traders. 

Canada exported a record-high 4.9 million barrels of crude oil and other products into the U.S. in January 2025, making it by far the largest source of U.S. oil imports. Mexico was the next highest source of imports in the same month, at 484,000 barrels per day. 

Canadian traders have long favoured U.S. markets due to Canada’s close proximity, cheap supplies and free trade—a relationship that led U.S. refineries to invest billions in their facilities so they could accept Canada’s heavier blends of oil. 

That tight-knit trade relationship—as well as Trump’s promise to keep domestic consumer prices down—is likely a major factor in the president’s decision thus far to leave energy products out of his tariff crosshairs, Johnston said. 

“I think this is a reflection of the fact that various importers on the U.S. side have informed the White House that, in fact, they do need Canadian oil,” he said. 

In May 2024, the Canadian government completed its construction of the Trans Mountain pipeline, a project that was meant to bring Canadian crude to new Asian markets. But American refiners are so partial to Canadian oil that, in addition to boosting Western Canada’s exports to Asia, the pipeline also more than doubled the amount of oil going to the U.S. West Coast by July 2024.