President Donald Trump announced that his 25 per cent tariffs on Canada and Mexico will come into effect on Saturday, though he is still considering whether to include oil from these countries in the import taxes.
“We may or may not,” Trump told reporters on Thursday in the Oval Office, referring to imposing tariffs on oil from Canada and Mexico. “We’re going to make that decision probably tonight.”
Trump explained that his decision would depend on whether the oil prices charged by the two trading partners are fair. However, the primary rationale behind the threatened tariffs is to address illegal immigration and the smuggling of chemicals used to produce fentanyl.
The potential imposition of tariffs on Canadian and Mexican oil could contradict Trump’s repeated promise to reduce overall inflation by lowering energy costs. Tariff-related expenses might be passed on to consumers in the form of higher petrol prices—an issue that Trump has placed at the heart of his Republican presidential campaign, pledging to halve energy costs within a year.
“One year from 20 January, we will have your energy prices cut in half across the country,” Trump said at a 2024 town hall event in Pennsylvania.
According to AP VoteCast, an extensive survey of the electorate, 80 per cent of voters identified petrol prices as a concern. Trump secured nearly six in ten votes from those who expressed worries about fuel costs.
In October, the United States imported approximately 4.6 million barrels of oil per day from Canada and 563,000 barrels from Mexico, as reported by the Energy Information Administration. During the same month, US daily oil production averaged nearly 13.5 million barrels.
Matthew Holmes, Executive Vice President and Chief of Public Policy at the Canadian Chamber of Commerce, argued that Trump’s tariffs would effectively “tax America first” by increasing costs.
“This is a lose-lose situation,” Holmes said. “We will continue working with partners to demonstrate to President Trump and Americans that this move does not make life more affordable. Instead, it raises costs and disrupts our integrated businesses.”
Despite economic analyses warning of potential price increases, Trump expressed no concern that import taxes on the United States trading partners would negatively impact the US economy.
“We don’t need the products they have,” Trump said. “We have all the oil we need. We have all the timber we need, meaning lumber.”
The president also stated that China would face tariffs for exporting chemicals used in the production of fentanyl. He has previously proposed a 10 per cent tariff on top of existing import taxes on Chinese goods.
On Thursday afternoon, oil prices were trading at around 73 per barrel.Priceshadsurgedtoover120 per barrel in June 2022 under President Joe Biden, coinciding with a period of four-decade-high inflation that contributed to widespread public dissatisfaction with the Democratic administration.
According to AAA, the average petrol price across the United States is currently $3.12 per gallon, roughly the same as a year ago.
Later on Thursday, Trump threatened further tariffs against countries exploring alternatives to the US dollar as a global currency.
He had previously issued a similar warning in November against the BRICS group, which includes Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, and the United Arab Emirates. Russian President Vladimir Putin has suggested that sanctions against his country and others necessitate the development of a dollar alternative.
“We will require a commitment from these seemingly hostile countries that they will neither create a new BRICS currency nor support any other currency to replace the mighty US dollar. If they do, they will face 100 per cent tariffs and can expect to lose access to the lucrative US economy,” Trump posted on social media.
-kiplinger
