US President Donald Trump said he expects his administration to impose tariffs related to oil and gas around February 18 and it could reduce the planned levy on some Canadian crude.
The US imports some 4 million barrels per day of oil from Canada, roughly 70 per cent of which is processed by refiners in the US Midwest. A tariff on oil imports could lead to lower production of fuel at those facilities and drive up costs for consumers, analysts and companies have warned.
Trump did not name a specific country to which the new tariffs would apply or provide any more details about the plans.
“We’re going to put tariffs on oil and gas,” Trump told reporters in the White House’s Oval Office. “That’ll happen fairly soon, I think around the 18th of February.”
Asked if tomorrow’s tariffs would include Canadian crude, Trump said: “I’m probably going to reduce the tariff a little bit on that. We think we’re going to bring it down to 10 per cent for the oil.”
That would be instead of 25 per cent that Trump has previously spoken about.
Many US oil refiners, especially in the Midwest, rely on imported crude because their facilities are configured to run heavier crude grades, such as those from Mexico and Canada.
They are awaiting clarity while preparing for the new tariffs on Canadian and Mexican crude imports. Earlier this month, imports of crude from Canada to the US hit record levels.
US refiner Phillips 66 expects production cuts in the Midwest and Rocky Mountain region where alternative crude supplies are limited if tariffs take effect.
Phillips 66, along with HF Sinclair and Par Pacific Holdings have elevated exposure to Canadian crude, data from TD Cowen shows.
“Our commercial and optimisation teams have been working hard to develop every possible scenario we can think of and how we would respond” to Trump’s tariffs, said Gary Simmons, chief operating officer of Valero, during call with analysts on Thursday.
Valero is the second-largest US refiner by capacity. -Reuters