China Turns to Canada for Oil as U.S. Trade Tensions Boil Over

Amid deteriorating relations with Washington and steep new U.S. tariffs, Chinese oil refiners are cutting their purchases of American oil by nearly 90%, opting instead to buy record volumes from Canada. The sudden pivot is not just a story of supply and demand—it’s a window into how geopolitics is reshaping the energy landscape.

📉 U.S. Crude Exports to China Collapse

Just months ago, the U.S. was a rising star in China’s energy mix. In June 2024, China imported as much as 29 million barrels of American crude—a signal that energy had become one of the few bright spots in U.S.-China trade relations.

That’s changed dramatically. With tariffs escalating and export restrictions tightening under President Trump’s aggressive trade agenda, those imports have plunged to just 3 million barrels per month, according to data tracked by Vortexa Ltd.

The collapse reflects more than just a pricing issue. Energy has now joined technology and agriculture as a battleground in the ongoing trade war.

📈 Canada Seizes the Opportunity

While U.S. exports shrink, Canadian oil is surging into the Chinese market. In March 2025, China imported a record 7.3 million barrels of Canadian crude—most of it shipped from the expanded Trans Mountain Pipeline (TMX) terminus near Vancouver.

That figure is expected to grow even higher this month, as Chinese refiners increasingly look to Canada to fill the gap left by U.S. barrels. The TMX pipeline, which only came online last year, is proving to be a game-changer for Canada’s role in Asia’s energy supply chain.

The 1,150-kilometer expansion now carries oil from Alberta’s vast oil sands straight to the Pacific coast, opening a new export lifeline to Asia that bypasses the U.S. entirely.

🛢️ A Perfect Match: Heavy Crude for Advanced Refineries

Why is Canada’s oil so attractive to China?

It’s all about chemistry. Chinese refineries, particularly the newer and more advanced plants along the coast, are configured to process heavy, high-sulfur crude—exactly the type Canada produces in abundance.

Other countries offer similar crude grades, such as Iraq’s Basrah Heavy. But Canadian oil is currently more competitively priced, especially as Middle Eastern suppliers remain pegged to higher pricing benchmarks like Dubai crude.

And with Russia under international scrutiny and the U.S. off the table, Canadian barrels offer both economic and geopolitical advantages.

“Given the trade war, it’s unlikely for China to import more U.S. oil,” said Wenran Jiang, president of the Canada-China Energy & Environment Forum. “They’re not going to rely solely on Russia or the Middle East. Anything from Canada is welcome news.”

🌐 Energy Trade Reflects Bigger Geopolitical Shifts

While the U.S., Russia, and the Middle East remain the dominant players in China’s crude supply chain, Canada’s rapid rise reflects a deeper shift in global energy dynamics.

This isn’t just about oil—it’s about resilience and diversification. As China recalibrates its foreign energy partnerships, Canadian oil is emerging as a symbol of flexibility and long-term reliability.

The shift also underscores how global trade tensions can spill into unlikely places. Energy markets, which once operated independently of political trends, are now clearly being shaped by them.

Canada’s Strategic Moment

Canada may have stumbled into this opportunity, but its long-term potential is substantial. With the TMX expansion finally complete, the country now has direct access to Asian buyers—and growing leverage in global energy discussions.

For Canada, this could be the beginning of a new era—one in which it plays a more central role in Asian energy security, while also reducing its dependency on U.S. markets.

As the U.S.-China trade war rages on, Canada finds itself in an unexpected but enviable position: a trusted supplier in an unstable world, with the infrastructure, reserves, and geopolitical neutrality to deliver exactly what China needs.