President Donald Trump's 25 percent tariffs on Mexico and Canada, due to come into effect on Saturday, may have a significant exclusion.
Speaking to reporters on Thursday, Trump said, "Oil is going to have nothing to do with it, as far as I'm concerned," when asked whether the tariffs would cover Canadian crude.
He added that oil "may or may not" be covered by the tariffs, so it remains unclear whether he intends to spare energy imports from his tariff plans.
Newsweek has contacted the White House for comment via email.
Why It Matters
Canada, the third largest exporter of goods to the U.S., provides the lion's share of American oil imports. In 2023, Canada accounted for 52 percent of the U.S.'s petroleum imports and almost all of its natural gas imports, the U.S. Energy Information Administration reported. Mexico accounted for 11 percent of U.S. oil imports in 2023.
The enforcement of 25 percent tariffs on both countries could result in higher pump prices for Americans, while sending ripples through the entire economy—given the reliance on energy for sectors such as manufacturing, transportation, logistics and agriculture. Increased inflation would jeopardize Trump's central campaign promise of bringing down Americans' cost of living.
A slowdown in energy trade would also have major effects on the energy sectors of Canada and Mexico, particularly for key exporting hubs such as Alberta.
What To Know
On Thursday, when pressed by a reporter about whether there would be "no oil tariffs," Trump replied: "I didn't say that. You said that." The president added: "We may or may not. We're going to make that determination probably tonight—on oil."
"We'll see," Trump continued. "It depends on what the price is. If the oil is properly priced—if they treat us properly, which they don't."
In November, Reuters, citing unnamed sources, reported that the president would not exempt crude oil from the tariffs on Canada and Mexico, despite the hopes of some industry leaders that he would.
When asked about the potential effects of the tariffs on the Canadian energy sector, Pierre Poilievre, the leader of Canada's Conservative Party, blamed the policies of the incumbent Liberal Party. He told reporters earlier this month that the government's restrictions on pipelines and liquefied natural gas plants in Canada had "forced Canadians to sell almost all of our energy to the United States, giving president Trump massive leverage in making these tariff threats."
Trump has said the tariffs are a means to curb the high influx of migrants and illicit drugs from Canada and Mexico and address the trade deficits the U.S. has with both countries.
What People Are Saying
Analysts from Goldman Sachs, including Daan Struyven, wrote in a note, as quoted by The Financial Post: "The inclusion of Canada oil in a 25 percent tariff on Canada and Mexico would likely initially raise gasoline prices in the U.S. Midwest."
Kimberly Clausing, an economist and a professor at the UCLA School of Law, previously told Newsweek: "Even very high tariffs could only replace a minority of the revenue raised by income taxation, and such high tariffs would cripple the economy."
What Happens Next
Trump and the White House have confirmed that the tariffs will take effect on Saturday. The president also said on Thursday that the 25 percent duties on Canada and Mexico "may or may not rise with time."
Researchers at Oxford Economics, an economic advisory firm in the U.K., predicted in November that if Trump proceeded with his tariff plans, Canada's gross domestic product would decline by 2.5 percent by early 2026, inflation and unemployment would rise sharply, and it would "push Canada into a recession in 2025."
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