U.S. Tariffs on Canada and Mexico: A Blow to Energy Security and Consumer Wallets

The Trump administration's decision to impose tariffs on Canadian and Mexican energy imports has raised concerns among industry experts and consumers alike. The American Fuel & Petrochemical Manufacturers (AFPM) President and CEO, Chet Thompson, has warned that these tariffs will not enhance U.S. energy security or lower costs for consumers. Let's delve into the potential impacts of these tariffs on the U.S. energy market and consumer wallets.



The United States relies heavily on energy imports from its North American neighbors. In December 2024, about 4.2 million barrels of crude oil were imported from Canada each day, accounting for more than 60% of total imports. Mexico accounted for another 7% of U.S. crude oil imports, or 451,000 barrels per day on average (EIA). These imports are crucial for U.S. refineries, as they help meet domestic demand for gasoline, diesel, and other fuels.

The 10% tariff on Canadian energy imports and 25% tariff on Mexican imports will likely increase the cost of gasoline and diesel for U.S. consumers in both the short and long term. The Yale Budget Lab estimates that Trump's tariffs could drive gasoline prices up by 1.6% on average in the long run. However, in the short run, the impact may be larger (Tedeschi, Budget Lab). Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security, estimates that tariffs could add 20 to 30 cents per gallon on average in the near term.



The tariffs could also have significant consequences for U.S. refinery operations, particularly those reliant on heavier crude oil from Canada and Mexico. Many U.S. refineries are designed to process heavier, sour crude oil, which is abundant in Canada and Mexico. If the cost of importing this crude oil becomes too high due to tariffs, refineries may reduce their runs, leading to lower gasoline, diesel, and jet fuel production. This could potentially threaten long-term refinery operations and lead to job losses in the refining sector.

The tariffs could also disrupt regional supply chains, making it more difficult and expensive for refiners in certain areas to access the crude oil they need to operate efficiently. This could lead to higher prices for consumers in these regions, particularly in the Midwest and Northeast.

In conclusion, the Trump administration's tariffs on Canadian and Mexican energy imports are unlikely to enhance U.S. energy security or lower costs for consumers. Instead, these tariffs could lead to higher energy prices, shortages, and compromised energy security for the United States. As Chet Thompson, president of the American Fuel & Petrochemical Manufacturers, stated, "Imposing tariffs on energy, refined products and petrochemical imports will not make us more energy secure or lower costs for consumers."