Trump to Consider Oil for 25% Tariffs

President Donald Trump has confirmed that his proposed 25% tariffs on Mexico and Canada will take effect on Saturday, though he is still considering whether to apply the measure to oil imports from both countries.  

Trump said Thursday that a decision on oil tariffs would be made “probably tonight,” adding that it would depend on whether he views the pricing of oil from Mexico and Canada as fair. His broader justification for the tariffs is to curb illegal immigration and the smuggling of chemicals used to produce fentanyl.  

The potential inclusion of oil in the tariff package raises concerns about its impact on energy costs. The United States imported approximately 4.6MMb/d from Canada in October and 563Mb/d from Mexico, according to the Energy Information Administration. The United States itself produced an average of nearly 13.5MMb/d during the same period.  

Matthew Holmes, Executive Vice President and Chief of Public Policy, Canadian Chamber of Commerce, said the proposed tariffs would raise costs for American consumers. “This is a lose-lose,” Holmes said. “We will keep working with partners to show President Trump and Americans that this does not make life more affordable. It makes life more expensive and sends our integrated businesses scrambling.”  

Trump dismissed concerns that tariffs on key trading partners could negatively impact the US economy, however. “We do not need the products that they have,” he said. “We have all the oil you need.”  

Oil prices were at approximately US$73/b on Thursday afternoon. Gasoline prices in the United States averaged US$3.12 per gallon, according to AAA, similar to a year ago.  

Trump also reiterated threats of new tariffs against countries exploring alternatives to the US dollar for global trade. He previously issued a warning in November to the BRICS group, which includes Brazil, Russia, India, China, and South Africa, along with new members Egypt, Ethiopia, Iran, and the United Arab Emirates.  

“We are going to require a commitment from these seemingly hostile countries that they will neither create a new BRICS currency, nor back any other currency to replace the mighty US dollar,” Trump posted on social media, adding that failure to comply could lead to 100% tariffs.