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Canada is patiently awaiting what the administration of U.S. President Donald Trump will do concerning a border-adjustment tax.

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It's no easy feat making plans in a postlogic world, but that's what Canada's energy sector is forced to do.

An early trade threat to emerge from Washington as Donald Trump stepped into the Oval Office was the imposition of a border adjustment tax. It's got oil companies, investors and a large contingent of Alberta Premier Rachel Notley's cabinet lying awake at night.

The concept, aimed at paying for corporate tax cuts and bolstering U.S. economic activity by penalizing imports, stemmed from the Republican-controlled Congress. Mr. Trump last month dribbled cold-ish water on the idea, saying, "Any time I hear border adjustment, I don't love it. Because usually it means we're going to get adjusted into a bad deal."

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"I don't love it" is not the same as, "It ain't happening." So worries about Canadian oil and gas getting slapped with a 20-per-cent tax at the border of the industry's only meaningful trading partner is causing no end of consternation. It's also being blamed for a sell-off in Canadian energy shares.

Since hitting a post-U.S.-election high in mid-December, the S&P/TSX capped energy index has fallen nearly 14 per cent at a time when recovery had appeared well under way. Meanwhile, U.S. oil and gas stocks, as measured by the S&P 500 energy index, are down by just 6 per cent in the same period.

Finance-industry types say U.S. portfolio managers are voicing some of the most intense concern over a punitive tax on Canadian energy. That shows the uncertainty surrounding this issue can't be written off as unfamiliarity among foreigners.

Last week, U.S. Speaker of the House Paul Ryan said deliberations over the proposed tax will last through the summer, which means the issue could hang over Canada's energy sector for a long time to come.

But wait: Logic dictates this is a bad idea, not just for its impact on Canada, but on U.S. businesses and consumers. In fact, dozens of U.S. companies have banded together to oppose it. There are many solid reasons to kibosh it.

One is the importance of Canadian heavy oil to U.S. refiners and Mr. Trump's resuscitation of TransCanada Corp.'s Keystone XL pipeline. On the surface, it makes little sense to approve a pipeline to Gulf Coast refineries that are geared to process the stuff, then make the oil more expensive.

Even before any trench gets dug in the United States for Keystone XL, there's the little matter of more than three million barrels a day of Canadian oil that already flow to refineries in Minnesota, Illinois, Indiana, Ohio and elsewhere. New U.S. Secretary of State Rex Tillerson, former CEO of Exxon Mobil, knows this calculus intimately.

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The pain from taxing the oil at the border would inevitably reverberate through to U.S. motorists and the transport sector. The Trump administration is seeking to reduce the United States' reliance on the Organization of Petroleum Exporting Countries, but even if light-oil output in North Dakota and Texas surges again as prices recover, Canadian crude will still be needed to meet demand. There's already been talk about exempting U.S. refineries that import crude.

One of Canada's weaker flanks in the tax equation could be natural gas, as there is a continent-wide glut and exports have been falling for much of the past decade. Still, U.S. consumers would bear the brunt of higher costs when they can most ill-afford it – during times of peak demand such as heat waves or Arctic blasts. There's also the risk that Canada could retaliate with taxes on rising U.S. gas imports into Southern Ontario.

All of these arguments are Mr. Spock-like in their logic and in past eras would be more than enough to nip a border tax on energy in the bud.

Now, it's difficult to gauge what Mr. Trump will do as he complains about getting shafted on trade.

He has already threatened to impose a border tax on Mexican products to "pay for" his wall on the southern border. Inexplicably, among the victims would be Americans who enjoy avocados and fine tequila.

Meanwhile, Mr. Trump's ham-handed ban on immigrants from seven Muslim-majority countries hurt U.S. companies with employees holding those passports before a court struck the executive order down.

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It all leaves Canada's energy industry watching, waiting and making predictions based on what appears to be a flawed assumption that the White House will come up with a reasonable, well-thought-out policy.

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