Canadian oil sector braces for Trump’s 25% tariff

Canada

CALGARY, November 29, 2024 – Canada’s oil sector is making preparations for a 25% import tariff threatened by US President-elect Donald Trump, with analysts predicting a range of impacts.

President-elect Trump has vowed to impose a 25% tariff on all goods arriving from Canada and Mexico, a move he says is meant to address concerns over illegal immigration and drug smuggling.

The tariffs would be imposed as soon as he takes office.

Canada exported around 4 million bopd to the USA in 2023, a figure representing 97% of the country’s oil exports, according to government statistics.

These volumes equate to between 20% and 25% of the crude oil processed and consumed in the USA. These supplies have ramped up in 2024 following the May 1 opening of the USD 24.7-billion Trans Mountain Expansion Project.

One impact widely foreseen by industry observers is steep rises in petrol prices for Americans, which could jump by as much as 70 US cents per gallon. The country’s current average petrol price is just over USD 3.

Another impact could be seen if Canada imposes retaliatory tariffs – a move Ottawa has confirmed it is preparing for.

Meanwhile, US heavy crude refiners, many of whom are reliant on the crude supplied by both Canada and Mexico, may face supply gaps.

If the tariffs are imposed, Canadian and Mexican producers may be compelled to sell crude to Asian buyers at a discount.

For its part, Mexico averaged 733,000 bopd of crude exports to the USA last year.

While some believe Trump’s plan is likely to exclude oil in light of the impact at US pumps, sources close to the plan told Reuters on Thursday that oil would not be excluded.

Read our latest insights on: