It was another roller-coaster week in US President Donald Trump’s trade war as tariffs against China came into force while Mexico and Canada were given a temporary reprieve. Now maritime experts say that tariffs on crude oil and products can change trade flows.
Over the last weeks, U.S. President Donald Trump has imposed and postponed tariffs on Canada and Mexico several times.
Tariffs are in place, but they will not apply to goods covered by the North American trade agreement known as USMCA.
Crude oil and refined products are covered under the USMCA, Poten & Partners said, so provided the energy companies file the appropriate paperwork, they should be able to meet the certification requirements necessary to ensure relief from the 10% and 25% levies on crude oil and refined products from Canada and Mexico respectively.
Despite this temporary (until April 2nd) reprieve, the energy industry remains on edge, Poten & Partners noted in its tanker opinion, adding that tariffs on crude oil and products can change trade flows.
The vast majority of the crude oil flows from Canada to the U.S. are transported via pipelines, while most of the product movements are seaborne.
“There are no pipelines connecting the U.S. and Mexico, so nearly all crude and products are shipped on tankers,” according to New York-based advisory, shipping & commodity brokerage Poten & Partners.
The vast majority of Canada’s crude oil exports to the U.S. are going via pipelines. “This limits the potential to change flows if tariffs are introduced,” Poten & Partners says.
For example, refiners in the U.S. Midwest are highly dependent on Canadian barrels and producers will likely pass on at least some of the added cost to the buyers, says Poten. “However, there are some seaborne flows that can be redirected if tariffs are introduced and maintained for an extended period of time.”
The White House gave to the press last week the fact sheet according to which duties imposed to address the flow of illicit drugs across the borders are now: 25% tariffs on goods that do not satisfy U.S.-Mexico-Canada Agreement (USMCA) rules of origin.
A lower 10% tariff on those energy products imported from Canada that fall outside the USMCA preference.
A lower 10% tariff on any potash imported from Canada and Mexico that falls outside the USMCA preference.
No tariffs on those goods from Canada and Mexico that claim and qualify for USMCA preference.
Trump announced adjustments to tariffs imposed on imports from Canada and Mexico to minimize the disruption to the automotive industry.
A day after offering Canada a reprieve on imposing 25% tariffs, President Donald Trump has indirectly threatened new tariffs on Canadian products.
“Canada is cheating the United States Farmers on USMCA. In 2024, Canada retained Tariffs on various U.S. Goods, particularly in protected sectors like Dairy that are operated under a supply management system,” Trump wrote on the social media, Truth Social.
On Truth Social, Trump criticized Canada for unfair and long-standing policy, claiming that US dairy farmers deserve fair treatment from Canada.
“These sky high Tariffs are part of Canada’s unfair, long-standing policy to shield domestic producers from foreign competition, especially in Agriculture. Our Great U.S. Dairy Farmers deserve fair treatment from Canada.”
“Enjoy it while you can!” he added.
Trump has justified the tariffs as a way to stop the flow of illegal immigration and drugs across the border.
Last week, the White House claimed that in Trump’s first month in office, illegal border crossings plummeted to the lowest level ever recorded, down 96% from the all-time high under the Biden-Harris Administration.
