Canadian oil industry expects reduced production and increased costs for North American consumers
The president-elect of the United States, Donald Trump (Republican Party), announced on Monday (25.Nov.2024) the implementation of 25% tariffs on imports from Mexico and Canada. The measure aims to put pressure on the 2 countries due to their alleged inaction in combating illegal migration and drug trafficking. Experts indicate that the action could increase gasoline prices in the US. The information was published by the newspaper.
The Canadian oil industry, which supplies more than half of the crude oil imported by the US, would be one of the hardest hit. Canadian producers fear the tariffs will increase gasoline and energy costs for Americans. “A 25% tariff on oil and natural gas would reduce production in Canada and increase energy costs for American consumers,” said Lisa Baiton, head of the Canadian Association of Petroleum Producers.
The proposal could violate the USMCA, a free trade agreement between the USA, Canada and Mexico, impacting the supply chains and economies of the 3 countries, says the newspaper. Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum have expressed concerns. Both suggest the move could spark a retaliatory trade war.
Trump also threatened to impose an extra 10% tariff on Chinese goods, intensifying global trade tensions. China called the action “irresponsible” and reaffirmed its commitment to open trade.
Analysts warn that if oil tariffs are imposed, American consumers would face higher prices at the pump. About 40% of refined petroleum in the US comes from Canada. American Fuel and Petrochemical Manufacturers, which represents U.S. refiners, called on politicians to reconsider policies that could undermine America’s energy advantage.
Already Tuesday (Nov 26, 2024), Mexican President Claudia Sheinbaum expressed concerns about Trump’s proposal. In a letter to the US president-elect, Sheinbaum stated that the tariffs could negatively affect the economies of the 3 countries. “Cooperation and mutual understanding are necessary to face these challenges. One tariff will follow another, until it puts our business at risk,” said the president, who read the content of the letter in a speech to journalists.
