Ammon News - Oil producers in Canada and Mexico will likely be forced to reduce prices and divert supply to Asia if U.S. President-elect Donald Trump imposes 25% import tariffs on crude imports from the two countries, traders and analysts said.
Two sources familiar with Trump's plan told Reuters that oil would not be exempted from potential tariff hikes on imports from Canada and Mexico, despite the U.S. oil industry's warnings that the policy could hurt consumers, industry and national security.
Canada and Mexico are the top two petroleum exporters to the United States, contributing 52% and 11% of its gross imports, respectively, data from the U.S. Energy Information Administration showed.
The United States accounts for 61% of waterborne flows from Canada, and 56% from Mexico, ship tracking data from Kpler showed.
Canadian waterborne crude exports have jumped 65% to about 530,000 barrels per day (bpd) in 2024, the data showed, after the opening of the expanded Trans-Mountain pipeline increased shipments to the U.S. and Asia.
"The Canadian producers, if they face export constraints, if they're not able to re-route their barrels that previously were exported to U.S. to other markets, may face deeper discounts and may also suffer some revenue losses," Daan Struyven, co-head of global commodities research at Goldman Sachs said.
Canada and Mexico export mainly heavy high-sulphur crude that is processed by complex refineries in the U.S. and most of Asia.