OMAHA (DTN) -- The United States could see reduced imports of Canadian petroleum, steel and lumber in the coming years as the Canadian government looks for ways to reduce its dependence on U.S. trade.

Canadian Prime Minister Mark Carney this week has laid out multiple plans to diversify its oil trade while also propping up steel and softwood lumber industries, which have been hit hard by U.S. tariffs.

Each of the moves could shift trade for each of those critical commodities away from the U.S. in the coming years, which could increase prices for those products in the U.S. as a result.

In a speech Thursday with business leaders in Alberta, Carney said U.S. tariffs and the uncertainty they have created "will wipe $50 billion from our economy -- the equivalent of $1,300 for every Canadian," Carney said.

"As the United States transforms all of its trading relationships, many of our strengths -- based on those close ties to America -- have become our vulnerabilities," Carney said.

Last year, more than three-quarters of Canadian exports went to the U.S. That includes more than 90% of the country's lumber, aluminum, and steel exports. And over 95% of Canada's energy exports went to the U.S., Carney said.

"This tight interdependence, once a strength, is now a weakness," Carney said.

Declaring the need for a new strategy, Carney signed a memorandum of understanding with Alberta Premier Danielle Smith to build a new oil pipeline through Western Canada to boost oil and natural gas that could ship as much as 400,000 barrels per day out of British Columbia "destined for Asian markets," the MOU stated.

Canada exports an average of 4.2 million barrels of oil daily to the U.S., which accounts for roughly 20% of total U.S. petroleum consumption. The plan would essentially reduce exports to the U.S. by about 10%.

"The U.S. has changed. That's their right. We must respond. That's our imperative," Carney said.

Carney laid out a plan to also boost electrical transmission and develop nuclear power to help boost "Canada's burgeoning AI ecosystem" while also saying the country would build the world's largest carbon capture, utilization and storage (CCUS) project, which would lower the carbon intensity of the country's oil.

On Wednesday, the Canadian government also pointed to a need to transform its economy because of U.S. tariffs. Carney announced plans to provide more aid to the country's steel and lumber industries, which continue facing tariffs from the U.S. Canada also moved to reduce quotas for its steel imports and impose its own 25% tariff on "steel-derivative" products. The plan essentially calls for both the steel and lumber industries to invest more in Canadian manufacturing and includes a $700 million investment to build more Canadian homes.

Most products exported from Canada are exempt from tariffs because of the United States-Mexico-Canada Agreement (USMCA), but Trump has imposed 50% tariffs on steel while lumber products face a 45% tariff. Another 25% tariff has been imposed on automobiles built in Canada.

Tensions between Canada and the U.S. have been high all year. Trump became upset in October when the province of Ontario bought ads during the World Series using a speech from former President Ronald Reagan in 1987 denouncing tariffs. Trump declared trade talks with Canada were suspended over the ad. U.S. Ambassador to Canada Pete Hoekstra then got into a heated exchange with a representative from Ontario while saying Canadians should consider being called the 51st state a compliment.

Carney is expected to be in D.C. next week for events around the FIFA World Cup and could meet with Trump at that time, the BBC reported. Canada, the U.S. and Mexico will each host games as part of the soccer tournament in 2026.

Carney's speech in Alberta: https://www.pm.gc.ca/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

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