If U.S. President-elect Donald Trump imposes 25% import tariffs on crude from Canada and Mexico, oil producers in these countries may be forced to lower prices and redirect supply to Asia, analysts and traders predict.
Sources familiar with Trump’s plan confirmed that crude oil would not be exempt from potential tariffs, despite concerns from the U.S. oil industry about the negative impacts on consumers, industry, and national security.
Canada and Mexico are the U.S.’s top two petroleum suppliers, contributing 52% and 11% of imports, respectively. The U.S. is also the primary destination for Canadian and Mexican waterborne crude exports, with Canada sending 61% and Mexico 56% of its oil to the U.S. in 2024.
If tariffs are imposed, Canadian and Mexican producers may face discounted prices to remain competitive in other markets, especially Asia. Canadian crude, primarily heavy high-sulphur oil, could find a market in China and India, where refineries can process such grades. Meanwhile, Mexican crude exports to Asia may also rise, though European refiners are less likely to compete due to limited interest in Canadian oil and small volumes of Mexican crude to Europe.
Despite these projections, some analysts remain doubtful that Trump will follow through on tariffs, as it could lead to higher consumer prices and harm U.S. refiners. The issue remains contentious, with tariff decisions still uncertain.
Also read: U.S. Consumers Face Price Hikes Amid Trump’s Tariff Threats on Mexican Imports
