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Some oil refineries will probably struggle to replace imported crude oil if President Trump imposes 25 percent tariffs on products from Canada and Mexico.
Jan. 31, 2025, 6:42 a.m. ET
Oil and gas companies in the United States are bracing for the possibility that President Trump will thrust their businesses into disarray and will drive up prices at the pump by imposing 25 percent tariffs on goods from Canada and Mexico.
The United States is the world’s largest oil producer, but the country’s refineries are designed to turn a mix of different types of oil into fuels like gasoline and diesel. Roughly 60 percent of the oil that the United States imports comes from Canada, and about 7 percent comes from Mexico. Many refineries are set up to use those imports and cannot easily switch to oil from other places.
Analysts are not sure just how Mr. Trump’s tariffs might ripple through the oil market — and who would bear the added expenses. The costs may not be significant if the tariffs are in place only temporarily, or if the administration makes it easy for refiners to obtain waivers to keep buying Canadian or Mexican crude without paying extra.
Mr. Trump has said that the tariffs would go into effect on Saturday. On Thursday, he suggested that he might exempt oil.
The oil and gas industry was one of the biggest supporters of Mr. Trump during the 2024 election, giving more than $75 million to his campaign, and the president has made helping the industry and lowering energy costs for consumers key policy priorities.
Among those likely to take a hit if Mr. Trump does not exempt fossil fuels are Canadian oil producers and U.S. refiners, particularly those in the Midwest that process a lot of Canadian oil and lack a ready substitute. American consumers in regions that depend on oil from Canada also could see slightly higher prices at the pump, particularly if fuel makers were to respond by cutting production. Gasoline prices in the Midwest could climb 15 to 20 cents a gallon, with more muted effects in other parts of the country, said Tom Kloza, global head of energy analysis at Oil Price Information Service.
