25/01/31
Trump tariffs on Canada, Mexico to include oil: Update
Trump tariffs on Canada, Mexico to include oil: Update
Updates with comments from Trump, plan for 10pc crude tariff. Washington, 31
January (Argus) — President Donald Trump said late Friday he will proceed with
plans to impose 25pc tariffs on imports from Canada and Mexico on 1 February,
with crude imports likely to be taxed at a lower 10pc rate. Trump separately
plans to impose tariffs on imports from China on 1 February. Asked if his Canada
tariffs would include crude imports, Trump said, "I'm probably going to reduce
the tariff a little bit on that," he told reporters at the White House. "We
think we're going to bring it down to 10pc." Trump, who previously tied tariffs
on imports from Canada, Mexico and China to their alleged inability to stem the
flow of drugs and migrants into the US, today insisted that the tariffs he plans
to impose on Saturday in fact have a strictly economic rationale and are
non-negotiable. The tariffs expected on Saturday "are not a negotiating tool",
Trump said. "No, it's pure economic … we have big deficits with all three of
them." Trump, in a wide ranging gaggle with reporters, separately mentioned that
he would impose tariffs on imported chips and oil and natural gas. "That'll
happen fairly soon, I think around 18 February," he said. It was not clear from
his remarks if he meant that all oil and gas imports into the US would be taxed,
or if he referred to supply only from Canada and Mexico. Trump said he would
also raise tariffs on imported steel, aluminium and eventually copper as well.
Trump brushed away criticism of potential negative impacts from his tariffs.
"You will see the power of the tariff," Trump said. "The tariff is good, and
nobody can compete with us, because we have by far the biggest piggy bank." 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. Canadian prime minister Justin Trudeau reiterated
today that Ottawa would retaliate against US tariffs. Mexican president Claudia
Sheinbaum also said her country has prepared responses to 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. Gas, petchems, steel and ags threatened 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. North American steel trading costs could rise by
as much at $5.3bn across the three nations, since Mexico and Canada are expected
to issue reciprocal tariffs against the US, as it did when Trump issued tariffs
in his first term. The tariffs could also disrupt US corn and soybean sales ,
since China and Mexico account for 48pc of US corn exports and 61pc of US
soybean exports since 2019, according to US Department of Agriculture (USDA)
data. By Haik Gugarats Send comments and request more information at
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