(New York) The United States is increasingly dependent on Canadian crude oil to meet domestic demand and that relationship faces potential strain due to President-elect Donald Trump’s threat of tariffs.
Posted yesterday at 1:21 p.m.
Damian J. Troise
Associated Press
More than 50% of crude oil imported into the United States comes from Canada, compared to 33% in 2013. This increase follows an increase in production from Western Canadian provinces and increasing pipeline capacity to its neighbor South. About 10% of imports come from Mexico.
Donald Trump has threatened to impose tariffs of up to 25% on products from Canada and Mexico. That has raised concerns that rising energy costs could ripple throughout the U.S. economy, making gasoline and other petroleum products more expensive and reigniting inflation.
“All three countries remain highly dependent on each other economically, and heavy taxes on key U.S. imports, such as crude oil or lumber, risk worsening consumer inflation in the United States. United,” highlighted a report led by Solita Marcelli, chief investment officer for the Americas at UBS Financial Services.
Canadian leaders are wondering how to react if Donald Trump carries out his threat. Ontario Premier Doug Ford has suggested banning imports of American-made alcohol and restricting energy exports. But Alberta Premier Danielle Smith has ruled out cutting oil exports and hopes to find an alternative.
Canada, due to its proximity to the United States, is also the country’s largest trading partner. Almost all Canadian oil is exported to the United States.
Canadian oil makes up the majority of total oil imports to the United States, despite the country’s oil boom over the past decade. This momentum has made the United States the world’s largest producer of crude oil and a net exporter. But a mix of chemistry and infrastructure, as well as geography and price, means the United States still has to import a significant amount of oil to meet demand.
The United States primarily produces light sweet crude oil, which is easier to refine than heavier crude oil, such as that which Canada primarily produces. But U.S. refining infrastructure is geared toward heavier crude oil. Heavier crude is cheaper to purchase because it is more difficult to refine.
Oil prices remained broadly stable through 2024 and the Organization of the Petroleum Exporting Countries (OPEC) cartel limited production amid weaker global demand. Energy commodities fell overall throughout the year, helping to dampen inflation.
Fuel oil costs fell 19.5% in November from a year earlier, contributing to an overall drop in energy commodity costs of 8.5%, according to the U.S. government’s latest consumer price report. consumption. Gasoline prices also fell compared to a year ago.
Energy tariffs would likely pass through to consumers through products made from oil refining. The most obvious impact would likely be felt at the gas pump, and rising gas prices tend to fuel broader inflation.
