Canada’s Oil, LNG Exports to China Surge 35%, 227% Amid U.S. Trade War

Canadian exports of crude oil and liquefied natural gas (LNG) to China surged sharply in August 2026, according to Chinese customs data cited by the South China Morning Post. The increase coincided with escalating trade tensions between Ottawa and Washington and Beijing’s broader push to diversify energy supply sources amid geopolitical risk.

Crude and LNG import figures for August 2026

China’s imports of Canadian crude oil climbed approximately 35% year-on-year in volume during August 2026. The value of those imports rose 64% to $782.3 million. In contrast, China’s total crude oil imports fell 23% year-on-year that same month. Regional disruptions linked to ongoing conflict in the Middle East contributed to this decline: imports from that region dropped 45.5% compared to August 2025.

In the LNG sector, Chinese imports of Canadian liquefied natural gas increased 227% year-on-year by volume in August 2026. Meanwhile, Chinese imports of sulfur from Canada rose 398% in value, even though volume grew by less than one-fifth.

Trade context: U.S.-Canada breakdown and China-Canada recalibration

The surge followed the collapse of U.S.-Canada trade negotiations at the end of August 2026. U.S. President Donald Trump responded by imposing 50% tariffs on roughly $20 billion worth of Canadian goods. Ottawa retaliated with duties ranging from 15% to 50% on more than 700 U.S. products, triggering an intensifying bilateral trade war.

By comparison, China-Canada relations have stabilized since the start of 2026 after years of diplomatic and commercial strain. In January, both countries agreed to lower tariffs on Chinese electric vehicles and Canadian canola and other agricultural products. They also committed to expanding cooperation in energy and trade.

How China manages oil market volatility

Shou Tiantian, chief economist at the Economist Intelligence Unit, stated that China approaches the global oil market with considerable flexibility—buying when prices fall and drawing on strategic reserves when prices rise. He noted that China’s systematic expansion of its oil stockpiles over recent years has strengthened its capacity to absorb price spikes.

Shou added that China capitalized on a brief de-escalation between the United States and Iran in late June and early July to purchase additional oil. Those shipments arrived in China during August 2026 and contributed to the month’s higher import totals. However, that window closed rapidly as Middle Eastern tensions reignited, likely prompting a subsequent slowdown in Chinese purchases.

Canada’s emerging role in China’s energy strategy

Although Russia remains one of China’s largest energy suppliers, Beijing’s diversification strategy constrains how much it can rely on further increases in Russian imports. Shou described Canada as “the rising partner,” citing improved diplomatic ties under Canadian Prime Minister Mark Carney as a catalyst for expanded commercial opportunities—including in oil trade.

He projected that China-Canada trade prospects from 2026 through 2028 would be “largely bright,” driven by Ottawa’s search for alternatives following its deteriorating trade relationship with Washington and Beijing’s parallel efforts to diversify its commodity supply chains.