[[{“value”:”
- US tariffs on Canadian and Mexican imports will add to the financial burden of US refiners struggling with declining profit margins.
- Canada may divert oil exports to Asia due to the tariffs, while Mexico could retaliate with limitations on oil supplies to the US.
- Industry leaders warn that the tariffs could ultimately benefit Asian refiners while harming US consumers with higher fuel prices.
Tariffs on imports from Canada and Mexico will further weaken the position of U.S. refiners who are already facing headwinds due to declining refining margins, Energy Aspects director of research Amrita Sen told Bloomberg on Monday.
On Saturday, the U.S. Administration announced that additional tariffs would be implemented on Canada, Mexico, and China this week. Canada and Mexico face 25% tariffs, with Canadian energy slapped with a lower, 10%, tariff.
The 10% tariff on Canadian oil imports doesn’t break U.S. refining, but it will add to the costs of refiners in the Midwest and the West Coast, although a weakened Canadian dollar would absorb some of that tariff, Sen told Bloomberg.
Canada could send more of its oil to Asia from its Pacific Coast after the expansion of the Trans Mountain pipeline, while the U.S. has to pay up for alternatives, Sen said.
The bigger problem for U.S. refiners would be the 25% tariff on imports from Mexico. Refiners in the U.S. Gulf Coast face much higher costs for 400,000 bpd of Mexican crude and another 200,000 bpd of fuel oil imports.
Essentially, the tariffs “are a boon to Asian refiners,” Sen told Bloomberg.
“It’s a win for a lot of the rest of the world, just a massive loss for US refining,” she added.
It will be an unintended consequence “but that is absolutely how it’s going to play out,” Sen said.
Commenting on the tariff announcement, American Fuel & Petrochemical Manufacturers (AFPM) President and CEO Chet Thompson said, “We are hopeful a resolution can be quickly reached with our North American neighbors so that crude oil, refined products and petrochemicals are removed from the tariff schedule before consumers feel the impact.”
“American refiners depend on crude oil from Canada and Mexico to produce the affordable, reliable fuels consumers count on every day,” Thompson added.
American Petroleum Institute President and CEO Mike Sommers commented that API would continue to work with the Trump administration “on full exclusions that protect energy affordability for consumers, expand the nation’s energy advantage and support American jobs.”
By Charles Kennedy for Oilprice.com
We give you energy news and help invest in energy projects too, click here to learn more
Crude Oil, LNG, Jet Fuel price quote
ENB Top News
ENB
Energy Dashboard
ENB Podcast
ENB Substack
The post Tariffs on Oil Are a Major Problem for U.S. Refiners appeared first on Energy News Beat.
“}]]
Energy News Beat