President Donald Trump announced that 25% tariffs on imports from Canada and Mexico will take effect on Saturday. However, he is still deciding whether to include oil from these countries in the new import taxes. “We may or may not,” Trump told reporters on Thursday in the Oval Office. “We’re going to make that determination probably tonight.”
Trump’s decision on oil tariffs will be based on whether the price of oil from Canada and Mexico is fair. The tariffs are primarily aimed at stopping illegal immigration and the smuggling of chemicals used for fentanyl. However, imposing tariffs on oil could undermine Trump’s promise to lower overall inflation by reducing energy costs. Higher tariffs could lead to higher gasoline prices, a key issue during his presidential campaign.
In 2024, Trump promised to cut energy prices in half within a year. “One year from Jan. 20, we will have your energy prices cut in half all over the country,” he said at a town hall in Pennsylvania. According to the Energy Information Administration, the US imported nearly 4.6 million barrels of oil daily from Canada and 563,000 barrels from Mexico in October. US daily production during that month averaged nearly 13.5 million barrels a day.
Matthew Holmes, executive vice president at the Canadian Chamber of Commerce, warned that Trump’s tariffs would “tax America first” by increasing costs. “This is a lose-lose,” Holmes said. “We will keep working with partners to show President Trump and Americans that this doesn’t make life more affordable.”
Despite economic analyses warning of higher prices, Trump expressed confidence that the US economy would not be negatively impacted. “We don’t need the products that they have,” he said. “We have all the oil you need. We have all the trees you need, meaning the lumber.”
Trump also announced that China would face tariffs for exporting chemicals used to make fentanyl. He previously proposed a 10% tariff on top of other import taxes on Chinese products. Oil prices were trading at around $73 a barrel on Thursday afternoon, compared to a spike of over $120 per barrel in June 2022 under President Joe Biden. Gas prices currently average $3.12 a gallon across the US, similar to last year’s prices, according to AAA.
Later on Thursday, Trump threatened more tariffs against countries considering alternatives to the US dollar for global trade. He previously made a similar threat in November against the BRICS group, which includes Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, and the United Arab Emirates. Russian President Vladimir Putin has suggested that nations need to develop a substitute for the dollar due to sanctions.
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