Although it’s more of a truce than a trade treaty, Alberta’s finance ministry may be breathing a little easier after the United States and China agreed to temporarily pause their escalating trade war, slashing tariffs for a 90-day period and sending oil prices and Calgary-based energy stocks higher on Monday.
The reprieve was fulled by news that US and China jointly announced over the weekend that reciprocal tariffs would be reduced by 115%, respectively, in what the White House is calling a “transformational vision for liberating Americans from the unfair trade practices that have gripped workers and businesses for decades.”
While hardly a free-trade love fest — it’s only in effect for 90 days — the move signals a détente in US president Donald Trump’s escalating war of words, with markets responding accordingly.
In Toronto, the S&P/TSX Composite Index jumped 140 points to 25,498.11 in late morning trading, buoyed by energy stocks and investor optimism for a rebound in global demand.
West Texas Intermediate (WTI) climbed 3% to US$63 per barrel, while Brent Crude climbed above $65 for the first time since April — good news for Alberta’s bottom line.
That’s because each US$1 increase in the price of WTI translates to roughly CAD$750 million in additional revenue and a welcome reprieve for Premier Danielle Smith’s government, which had been bracing for a potential $10 billion budget deficit for the present fiscal year.
With WTI bouncing off recent lows, the deficit forecast may yet be revised with black ink when Finance Minister Nate Horner revisits budget numbers in August.
“There’s a tangible sense of relief, but no one’s popping champagne just yet,” said one Bay Street analyst. “This isn’t a deal — it’s a timeout.”
Still, oil patch investors were quick to pounce on the bounce. Calgary’s Big Four energy firms all saw healthy gains:
Suncor Energy (SU): Up 3.15% to $41.52
Cenovus Energy (CVE): Gained 3.82% to $26.93
Canadian Natural Resources (CNQ): Climbed 2.97% to $96.44
Imperial Oil (IMO): Rose 2.61% to $84.20
The rally comes amid broader bullish sentiment in US markets, where the Dow Jones soared 953 points on hopes that the 90-day pause might evolve into a more durable trade arrangement.
Treasury Secretary Scott Bessent hailed the Geneva talks as “productive,” and confirmed more negotiations were on deck.
Still, analysts remain wary with recent history offering little reason to believe stability will last.
Back in Alberta, the timing couldn’t be better.
Oil royalties, the lifeblood of the UCP government’s coffers, were looking shaky after months of volatile prices and mounting global supply concerns.
Morgan Stanley recently slashed its oil price outlook, warning that excess production from OPEC+ could drive Brent below $60 in 2026 — translating into sub-$55 for WTI — and threaten US production growth.
But those same analysts said if China’s economy revs up, it could mean a surprise jolt in demand just as Alberta’s producers eye tighter capital discipline.
“This could be a short-lived sugar high,” cautioned Global Markets Insights. But for a province like Alberta, even a short-term spike in oil can make all the difference in the ledger.
The Alberta government, which had been teetering near negative fiscal territory, may now have a few more tools to balance the books — at least if crude holds above the US$60 mark.
For now, it’s a welcome boost. Just don’t count on it lasting beyond the 90-day ceasefire.
