Canada's canola oil exports to the United States are unlikely to face major disruption during the upcoming USMCA renegotiations, industry analysts said Feb. 25, 2026, as both countries remain deeply integrated in renewable diesel and biofuel supply chains-an interdependence that carries major implications for farm income, commodity prices and energy markets.

As negotiations over the United States-Mexico-Canada Agreement (USMCA) are expected to unfold over the coming months, concerns about tariff risks have surfaced across the North American agricultural sector. However, trade data and industry fundamentals suggest that oilseed flows and biofuel processing capacity on both sides of the border are too economically intertwined to justify major disruption.

Biologicals

Biologicals Gain Ground in Latin America, but Where Do They Really Fit in the Grower's Toolbox?

At the center of the discussion is canola oil. Canada exports the bulk of its crude and refined canola oil to the U.S., where it is processed into renewable diesel. In return, Canada imports significant volumes of finished renewable diesel and, previously, biodiesel. This two-way trade has become a cornerstone of North American sustainable agriculture and low-carbon fuel strategies.

Canada accounts for the majority of U.S. renewable diesel exports. In August shipments, 74% of U.S. renewable diesel exports were destined for Canada. Biodiesel showed similar patterns before being phased out, with a record 939,000 barrels shipped to Canada in April 2023-representing 82.3% of total monthly exports.

The scale of this integration is evident in import volumes:

Imports peaked at nearly 2.9 billion pounds in 2023, reflecting the rapid expansion of renewable diesel production capacity in the U.S. Midwest and Gulf Coast. Although volumes have eased in 2024 and 2025 as biodiesel is replaced with renewable diesel and policy uncertainty slowed blending mandates, trade remains historically strong.

For U.S. agriculture, the benefits are clear. American biofuel producers capture added value by processing Canadian canola oil, supporting crush margins and helping stabilize diesel supply. This contributes indirectly to managing domestic fuel prices and improving supply chain resilience. Any tariff-related disruption would risk higher input costs, tighter margins and volatility in commodity markets.

On the Canadian side, the country's rapid expansion in canola crush capacity over the past decade was largely built on supplying U.S. biofuel demand. The share of crude and refined canola oil exported to the U.S. rose from 62.2% in 2015 to 95.4% in 2024. While that share fell to 76.7% in 2025 amid uncertainty around U.S. blending mandates and tax credits, expectations are that policy clarity will restore stronger flows.

The transition from biodiesel to renewable diesel is also structurally important. Renewable diesel, produced through hydrogenation of vegetable oils such as canola oil, is chemically identical to petroleum diesel and can be used at 100% concentration without engine modifications. Biodiesel, by contrast, required blending and posed cold-weather performance challenges, limiting its long-term viability in northern climates.

Canada is beginning to expand its own renewable diesel capacity. Imperial Oil's new refinery in Strathcona County, Alberta, launched production in August 2025 with capacity of approximately 20,000 barrels per day-equivalent to roughly 2.26 billion pounds annually. That investment could gradually reduce Canada's reliance on U.S. imports while strengthening domestic value-added processing.

Meanwhile, the U.S. continues expanding soybean crush capacity to supply soybean oil as feedstock for renewable diesel. This strategic pivot reduces reliance on raw soybean exports and aligns with broader farm bill priorities tied to bioenergy, rural development and sustainable agriculture goals.

For producers, co-ops and agribusiness investors, the takeaway is straightforward: cross-border oilseed and renewable diesel trade is mutually reinforcing, supporting farm-level returns, stabilizing commodity prices and advancing climate policy targets.

While USMCA negotiations may generate political volatility, the economic logic underpinning North American biofuel integration makes severe disruption unlikely. In a sector where yields, input costs and policy certainty shape long-term planning, that stability matters.