Canada's oil windfall may yet wipe out its losses from tariffs

From the article:

While Canadians are also feeling the impact of fluctuating oil prices — both at the pump and as it gets absorbed into shipping costs — the windfall from those profits could boost the overall economy enough to offset the cost of Trump's tariffs, with some provincial governments even projecting a turnaround on their deficits.

[...]

Economist Jim Stanford, director of the Centre for Future Work in Vancouver, estimates that the second quarter after-tax profits of the whole industry, upstream and downstream, doubled those of its first quarter, to come in at about $23 billion. (Of course, while Americans paid for most of that windfall, Canadian consumers also had to pay more at the pump.)

[...]

Alberta has already ridden the Iran war's oil bonanza to a complete reversal of its financial fortunes, moving from a projected $9.4-billion deficit to a $2-billion surplus.

Newfoundland and Labrador was projecting a $668-million deficit this year. This week, Finance Minister Craig Pardy told CBC News "we're looking at $500 million plus to our coffers as a result of the upswing in oil," bringing the province much closer to balance. Prices now look set to remain well above the province's budget estimate of $79 US per barrel for some time.

[...]

The federal government stands to benefit, too, mostly through corporate and personal income taxes. Tyler Meredith, former economic advisor to the Trudeau government, told CBC News that every $10 increase in the price of a barrel of oil translates into about $2 billion of additional revenue for the federal government — "a pretty substantial benefit."

[...]

U.S. tariffs affect about $28 billion worth of goods, so at first glance the oil windfall appears inadequate to compensate for tariff losses. But some tariffed goods will continue to trade, because U.S. buyers need them and lack alternatives. Other goods will find different markets, either in Canada or abroad.

[...]

Offshore oil production in Newfoundland and Labrador is already up about 25 per cent this year.

[...]

Already, U.S. tariffs fall much more heavily on manufacturing provinces such as Ontario, Quebec and British Columbia than they do on Alberta and Saskatchewan.

Higher prices will put even more pressure on industries that consume a lot of energy, such as manufacturing and transportation. High energy prices also tend to spill over into inflation in food and consumer goods, at a time when many Canadian families are already feeling stretched to make ends meet.

But high oil prices should also relieve downward pressure on the Canadian dollar, allowing for cheaper imports, which can partly counteract inflationary pressure on the cost of living.