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Trudeau Government Frets Over Trump Oil Tariffs
The federal government of Canada has signaled it worries about the possibility of the next U.S. administration imposing a 25% tariff on all Canadian exports south, Reuters has reported.
“We have some work to do to make sure we are effectively articulating the way in which tariffs would be counterproductive, and that’s not just true of oil,” natural resources minister Jonathan Wilkinson said, as quoted by the publication. He added that “There’s a lot of time and effort that will need to go into ensuring that we’re having the appropriate conversations.”
The Trudeau government has been highly critical of the oil and gas industry, singling it out as the largest contributor to the country’s carbon dioxide emissions and recently seeking to reduce these with a cap that would prompt a substantial reduction in production.
The Canadian oil sands are essentially the only source of heavy crude for Gulf Coast refineries because of the sanctions on Venezuela and Russia, and the simple fact of Canada’s proximity to the United States. This essential nature of Canadian oil imports became reason for many to doubt Trump would go as far as to impose tariffs on Canadian imports.
According to media reports, the president-elect has no plans for exceptions to his tariff regime but some observers have noted that this would push retail fuel prices in the United States higher and that would be the opposite of what Trump promised on the campaign trail.
The Canadian government’s worry about the tariffs on oil they want themselves to greatly reduce in terms of supply echoes similar sentiment in the industry. Canadian oil and gas producers are worried about the possibility of Trump making their products 25% more expensive for their biggest clients south of the border—and so are the clients. A tariff of 25% on Canadian crude would put them in a tight spot because alternative suppliers are not really numerous and two of them are heavily sanctioned by Washington.
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