Scotiabank Global Equity Research predicted U.S. President Donald Trump’s 10 per cent tariff on all energy imports from Canada, due to go into effect Tuesday, would be short-lived, as higher energy costs pinch American consumers. On Monday afternoon, Prime Minister Justin Trudeau said the U.S. has agreed to pause tariffs on Canada for at least 30 days.

Over the weekend, Trump had announced a 25 per cent import tariff on all Canadian goods except energy products, which were to carry a 10 per cent levy. Canada had prepared an initial response, including a 25 per cent tariff on hundreds of goods originating in the United States.

For investors, Scotiabank said the situation presented an opportunity to buy certain oil and gas stocks at a discount.

The iShares S&P/TSX Capped Energy Index ETF (XEG.TO), a basket of Canada’s largest oil and gas producers, closed slightly lower in Monday's session.

The country's main stock index (^GSPTSE) fell 1.14 per cent in the trading session. Materials shares advanced. Financial stocks fell. Jefferies Group analysts say the S&P/TSX Composite index could see an immediate correction "upwards of 10 per cent," in a new note to clients.

We do not expect tariffs to last long, and view share price weakness as a buying opportunity.”Scotiabank analyst Jason Bouvier

Scotiabank analysts led by Jason Bouvier say a U.S. tariff on Canadian energy would motivate producers to maximize exports to non-U.S. markets through the recently expanded Trans Mountain pipeline, and re-exports from the U.S. Gulf Coast.

“However, the majority of Canada’s oil exports will still be sold in the U.S. As such, we expect producers to bear part of the tariff through reduced realized prices,” they wrote in a note to clients on Monday.

With 2025 strip pricing for West Texas Intermediate (CL=F) at about US$71.50, and the discount on Western Canadian Select crude at US$15 per barrel, Scotiabank estimates the tariff on Canadian oil will work out to about US$5.60 per barrel.

“The most impacted [exploration, development and production] firms are those with Canadian assets with limited exposure to non-U.S. markets," they wrote. "However, we do not expect tariffs to last long, and view share price weakness as a buying opportunity.”

Scotiabank says the “most exposed” producers under its coverage are Athabasca Oil Corporation (ATH.TO), Cenovus Energy (CVE.TO)(CVE), and MEG Energy (MEG.TO).

Calgary-based Imperial Oil (IMO.TO)(IMO) kicked off fourth-quarter earnings season for Canada's oil and gas majors on Friday. Imperial is majority-owned by American oil giant ExxonMobil (XOM).