President Donald Trump's top economic advisers are providing conflicting guidance on the tariffs the US will impose on Canadian and Mexican imports as early as Tuesday.
The effective date for the tariffs, which Trump announced via an executive order a month ago, is 12:01am ET on Tuesday. The executive order calls for imposing a 10pc tax on Canadian energy imports, a 25pc tariff on non-energy imports from Canada and a 25pc tariff on all imports from Mexico.
Trump last week said that the tariffs will go into effect as planned.
But US treasury secretary Scott Bessent over the weekend referenced a proposal by Mexico City to match the level of tariffs Trump has leveled or is planning to impose on imports from China, as a way to avoid a trade war between the US, Mexico and Canada.
"It would be a nice gesture if the Canadians did it also, so in a way we could have ‘Fortress North America' from the flood of Chinese imports," Bessent said in a televised interview.
Trump ordered a 10pc tariff on all imports from China, effective on 4 February. He is threatening to double that tax on Tuesday. The rate would be in addition to all previously imposed tariffs on imports from China.
US commerce secretary Howard Lutnick, in turn, said on Sunday that the import taxes on Canada and Mexico would proceed as scheduled, but their exact levels may not be as high as set out in Trump's order last month.
"There are going to be tariffs on Tuesday on Mexico and Canada," Lutnick said. "Exactly what they're going to be, I'm going to leave that for the president to decide."
Trump's economic adviser Kevin Hassett separately suggested that the tariffs could go into effect at the levels Trump set, but that the White House could lower them over time if talks with Canada and Mexico on border security are successful.
The Canada and Mexico tariffs are not in place yet, but vast segments of the energy industry — oil and gas producers, refiners, pipeline operators, traders — already are bracing for potentially disruptive outcomes.
US independent refiners, already facing weaker margins, falling demand and regulatory uncertainty in their burgeoning renewables businesses, expect that tariffs will lead to higher feedstock costs and will cause some to reduce runs, cutting further into profits.
A major European energy trading company has redirected some volumes of natural gas that were scheduled to flow across the US border into Canada to reduce the company's exposure to the threat of impending tariffs.
The imposition of tariffs after decades of free trade in energy across North America is expected to create legal uncertainty in contractual obligations related to the payment of tariffs and reporting requirements. The current US import duties on crude are set at 5.25¢/bl and 10.5¢/bl, depending on crude quality. The administration has said the new tariff would be based on the value of the commodity — without specifying how that will be calculated and at what specific point during the transportation process.
US government agencies are not expected to clarify the implementation details until Trump's executive order on tariffs goes into effect.
