Trump announced on his social media platform, Truth Social, that on his inauguration day, January 20, 2025, he will issue an executive order imposing additional tariffs on China, Mexico, and Canada. Daan Struyven, a researcher at Goldman Sachs, warned that this action could have pretty significant consequences.
Struyven stated that the tariff could impact US refiners, who rely on Canadian oil, potentially reducing profit margins and driving up consumer prices. Canadian oil producers may also face revenue losses, as the U.S. imports large volumes of Canadian oil, with a record 4.3 million barrels per day in July 2024.
Additionally, refiners in the Midwest, which specialize in processing Canada’s heavy sour crude oil, could face challenges if imports are disrupted by the proposed tariff.
Nevertheless, Goldman Sachs forecasts that Trump may not implement the tariff policy, as he will likely focus on lowering energy costs. Viktor Shvets, global strategist at Macquarie Capital, stated that Trump can not afford to let inflation spiral out of control ahead of the midterm elections.
Shvets also noted that Trump may use tariffs mainly as a negotiating tool for other objectives, and warned that a significant tariff increase could negatively affect U.S. domestic manufacturers and exporters.
