US Tariffs Drive Canada and Brazil Energy Pivot Toward Asia
Washington's 50% duties on both countries are accelerating a redirection of oil and gas flows that structured US trade relations did not anticipate.
A Foreign Policy analysis published Tuesday (2026-09-08) framed the United Nations, supported by a network of steering groups and regional bodies, as the only viable institutional anchor for global order. The argument landed as US tariff escalation was actively fracturing the trade relationships that multilateral rules were built to stabilize.7
The damage has been tangible. On Monday (2026-07-20), the White House announced 50% duties on nearly $20 billion worth of Canadian goods, effective August 2026, according to Foreign Policy. USMCA, the framework governing that trade, oversees roughly $1.6 trillion in annual US-Canada-Mexico commerce. The US trade gap with Canada had already fallen 21% last year to $48.3 billion, per US Census Bureau data cited by Foreign Policy — undermining the stated rationale for the escalation.5
Trump imposed a matching 50% tariff on Brazilian goods in July 2026, driven by displeasure at the prosecution of former President Bolsonaro rather than any trade imbalance argument, the Economist reported. When the tariff landed, Brazilian officials reached for multilateral rule books.2
Both responses produced the same commercial logic: accelerate diversification away from the US market. Canada moved first. Prime Minister Mark Carney announced late in the week of June 29 (2026-06-29), at a news conference in Calgary, that Ottawa would enter a public-private partnership to build a new West Coast pipeline capable of carrying up to one million barrels of Alberta oil per day to Asian export markets, according to E&E News. Alberta production has long traded at a discount due to egress constraints. A Pacific route removes that exposure.3
Brazil's energy reorientation toward China was already underway before the tariffs hit. Doomberg reported in April (2026-04-22) that Brazil's expanding energy trade with China was setting up a direct clash with Washington. Trump's July 2026 tariffs gave that dynamic sharper definition.4
Asian buyers can absorb the supply. JKM, the Asian LNG benchmark, was $24.38/MMBtu on Wednesday (2026-09-09). ICE Brent crude front-month was $99.12 per barrel on Wednesday (2026-09-09), with NYMEX WTI crude front-month at $94.06. For Alberta heavy crude, strong Pacific Basin oil prices make the economics of a West Coast route compelling even before factoring in tariff avoidance.
American LNG export growth adds dimension. RBAC data show US LNG exports are forecast to more than double from 14.9 billion cubic feet per day in 2025 to 32.4 billion cubic feet per day by 2035. The EIA estimates the country could add 44.9 billion cubic feet per day of pipeline capacity in 2026-27, with 31.6 billion cubic feet per day already under construction. The recently completed Matterhorn Express, a 580-mile pipe, added 2.5 billion cubic feet per day of Permian Basin takeaway to the Katy Hub area near Houston. Canada contributes 2.1 billion cubic feet per day in cross-border flows, per the RBAC dataset.6
Washington's energy strategy pulls in two directions at once. The US is aggressively building LNG export capacity aimed at the same Asian buyers Canada and Brazil are now courting with their own barrels and molecules. Competition for Asian energy market share is intensifying precisely as tariffs push two major US trade partners to develop routes that bypass the American market.
China has watched this play out with calculation. Diplomats in Beijing, according to the Economist, see Western alliance cohesion as the real strategic constraint on their options, particularly regarding Taiwan. Trade fractures among US-aligned economies reduce that constraint without any action required from Beijing.1
The Foreign Policy governance piece argues the central challenge is balancing centralized coordination with regional autonomy. Energy trade is answering that question in practice, routing around the disruption rather than waiting for institutional resolution. Canada's West Coast pipeline still requires construction across difficult terrain and years of regulatory approvals. Whether Alberta producers absorb continued US market pricing in the interim or move faster toward Asian term deals will set the pace of the shift.7