President Donald Trump will proceed with plans to impose 25pc tariffs on imports from Canada and Mexico and 10pc on imports from China on 1 February, the White House said today.
The White House pushed back on reports that the tariffs would be delayed and declined to confirm whether Trump made a decision on whether to exclude Canadian and Mexican crude from the tariffs.
"Those tariffs will be for public consumption in about 24 hours tomorrow, so you can read them then," the White House said.
The looming face-off on tariffs has unnerved US oil producers and refiners, which are warning of severe impacts to the integrated North American energy markets if taxes are imposed on flows from Canada and Mexico. Industry trade group the American Petroleum Institute has lobbied the administration to exclude crude from the planned tariffs.
Trump on Thursday acknowledged a debate over the application of tariffs to oil but said he had yet to make a decision on exemptions.
The White House dismissed concerns about potential inflationary effects of Trump's tariffs. "Americans who are concerned about increased prices should look at what President Trump did in his first term," it said.
Canadian prime minister Justin Trudeau reiterated today that Ottawa would retaliate against US tariffs.
Nearly all of Mexico's roughly 500,000 b/d of crude shipments to the US in January-November 2024 were waterborne cargoes sent to US Gulf coast refiners. Those shipments in the future could be diverted to Asia or Europe. Canadian producers have much less flexibility, as more than 4mn b/d of Canada's exports are wholly dependent on pipeline routes to and through the US.
Canadian crude that flows through the US for export from Gulf coast ports would be exempt from tariffs under current trade rules, providing another potential outlet for Alberta producers — unless Trump's potential executive action on Canada tariffs eliminates that loophole.
Tariffs on imports from Canada and Mexico would most likely have the greatest impact on US Atlantic coast motor fuel markets.
New York Harbor spot market gasoline prices are around $2/USG, meaning a 25pc tariff on Canadian imports could up that price by as much as 50¢/USG. This could prompt buyers in New England or other US east coast markets to look to other supply options. Canadian refiners could also start sending their product to west Africa or Latin America.
US refiner Valero said that the tariffs could cause a 10pc cut in refinery runs depending on how the tariffs are implemented and how long they last.
The tariffs may affect regional natural gas price spreads and increase costs for downstream consumers, but there is limited scope for a reduction in gas flows between the two countries — at least in the short term.
The US is a net gas importer from Canada, with gross imports of 8.36 Bcf/d (86.35bn m³/yr) in January-October, according to the US Energy Information Administration (EIA). The US' Canadian imports far exceeded the 2.63 Bcf/d it delivered across its northern border over the same period, EIA data show.
Tariffs on Canadian and Mexican imports also will disrupt years of free flowing polyethylene (PE) and polypropylene (PP) trade between the three countries, market sources said.
