President Donald Trump has announced that his 25% tariffs on Canada and Mexico will take effect on Saturday (February 1, 2025), but he is still deliberating on whether to include oil from these countries in the import taxes.
“We may or may not,” Mr. Trump informed reporters on Thursday (January 31, 2025) in the Oval Office regarding the possibility of tariffing oil from Canada and Mexico. “We’re going to make that determination probably tonight.”
Mr. Trump emphasized that his decision will be based on whether the price of oil charged by the two trading partners is fair, although the primary focus of the threatened tariffs is to curb illegal immigration and the smuggling of chemicals used for fentanyl.
The potential tariffs on Canadian and Mexican oil could potentially contradict Mr. Trump’s promise to reduce overall inflation by lowering energy costs. The additional costs associated with tariffs could be passed on to consumers in the form of higher gasoline prices, a key issue that Mr. Trump championed during his Republican presidential campaign as he pledged to cut energy costs by half within a year.
“One year from Jan. 20, we will have your energy prices cut in half all over the country,” Mr. Trump declared at a 2024 town hall event in Pennsylvania.
According to AP VoteCast, a comprehensive survey of the electorate, 80% of voters expressed concerns about gas prices. Mr. Trump secured the support of nearly 6 in 10 voters who were worried about prices at the pump.
In October, the United States imported almost 4.6 million barrels of oil daily from Canada and 563,000 barrels from Mexico, as reported by the Energy Information Administration. During the same month, U.S. daily oil production averaged nearly 13.5 million barrels.
Matthew Holmes, the executive vice president and chief of public policy at the Canadian Chamber of Commerce, criticized Mr. Trump’s tariffs, stating that they would ultimately lead to higher costs for Americans.
“This is a lose-lose situation,” Holmes remarked. “We will continue to collaborate with partners to demonstrate to President Mr. Trump and the American people that this approach will not make life more affordable but will, in fact, make it more expensive and disrupt our integrated businesses.”
Despite concerns raised by many economic analyses about the potential negative impact of import taxes on U.S. trading partners, Mr. Trump remained resolute that such actions would not harm the U.S. economy.
“We don’t need the products that they have,” Mr. Trump asserted. “We have all the oil you need. We have all the trees you need, meaning the lumber.”
The President also announced that China would face tariffs for exporting the chemicals used in the production of fentanyl. He had previously proposed a 10% tariff in addition to existing import taxes on Chinese products.
On Thursday (January 31, 2025), oil prices were trading at around $73 per barrel. Prices had surged to over $120 per barrel in June 2022 during President Joe Biden’s term, coinciding with a spike in overall inflation that contributed to widespread public dissatisfaction with the Democratic administration.
“Gas prices are averaging $3.12 per gallon across the United States, similar to prices a year ago,” according to AAA.
Later that same day, Mr. Trump issued a new threat of tariffs against countries exploring alternatives to the U.S. dollar as a global exchange medium.
Previously, in November, the President had made a similar threat against the BRICS group, which includes Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, and the United Arab Emirates.
Russian President Vladimir Putin had suggested that sanctions imposed on his country and others necessitated the development of an alternative to the dollar.
“We are going to require a commitment from these seemingly hostile countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar, or else they will face 100% Tariffs and should be prepared to say goodbye to selling into the wonderful U.S. Economy,” Mr. Trump stated on social media.
Published – January 31, 2025 10:15 am IST
