According to Reuters sources, Trump plans to include Canadian and Mexican oil in his proposed 25% import tariffs. Industry warns this could affect consumers, the energy sector, and national security, as the US currently imports 56% of Mexico’s crude oil exports and 65% of Canada’s, totaling around 530,000 barrels per day.
Daan Struyven, Goldman Sachs’ researcher, warns that Canada oil producers may shift exports to other countries. This aligns with a warning from a Singapore-based trader, who noted that Canada and Mexico’s heavy, high-sulfur crude requires advanced refineries in the US and Asia. Canadian producers may offer deeper discounts to attract Asian refiners.
The trader also highlighted challenges for US refiners, as alternatives like Saudi Arabian heavy crude are limited. Moreover, some refineries rely solely on pipeline imports, further restricting their options.
Analysis and sources in Asia predict that Trump’s tariffs will redirect more Canadian and Mexican oil to Asia, with some likely heading to China and India, where their refiners can process heavy crude. In recent months, Asia has seen increased oil flows through the Trans-Mountain pipeline (TMX), even as Mexican crude exports have dropped 21% this year to around 860,000 barrels per day.
As for European refiners, analyst Christopher Haines from Energy Aspects says they are less likely to be affected by the tariff as they currently import only 85,000 bpd of Canadian crude and 191,000 bpd of Mexican crude. While Spain may purchase some Mexican oil, it’s expected that Asian countries will absorb the remaining volumes not sold into the US Gulf.
Nevertheless, traders and analysts remain skeptical about whether Trump will actually impose his tariff policy, as it could drive inflation for US consumers and refiners. They believe he intends to use it as a negotiating tool.
