U.S. consumers are bracing for higher fuel prices following President Donald Trump’s decision to impose tariffs on Canadian and Mexican oil imports. Industry analysts warn that the move, intended to pressure America’s neighbors on immigration and drug trafficking, will likely result in higher costs at the gas pump, adding to inflationary pressures already burdening American households.
The U.S. currently imports approximately 4 million barrels per day (bpd) of Canadian crude, with nearly 70% processed by Midwestern refineries. Additionally, over 450,000 bpd of Mexican oil is refined primarily along the Gulf Coast. Under the new tariffs, Canadian oil will face a 10% levy, while Mexican oil will be hit with the full 25% tariff. These additional costs will increase refining expenses for gasoline and diesel, which will inevitably be passed on to consumers.
“Expect fuel prices to rise noticeably if oil and refined products are not exempt,” said Patrick De Haan, an analyst at GasBuddy. He added that the longer these tariffs remain in place, the greater the economic impact will be.
The American Fuel and Petrochemical Manufacturers Association, which represents U.S. refineries, has expressed concern over the tariffs, hoping they will be lifted before significantly affecting consumers. Trump initially proposed a 25% tariff on all Canadian and Mexican imports, but later reduced the rate on Canadian oil to 10% to soften the immediate impact on fuel costs. However, the energy industry remains on edge as these new levies disrupt long-standing supply chains between the three nations.
The Midwestern U.S. is particularly vulnerable to these tariffs, as its refineries rely heavily on Canadian heavy crude with few viable alternative suppliers. Wells Fargo analyst John LaForge noted the difficult position of both Canadian oil producers and U.S. refiners, stating:
“The oil in Alberta doesn’t have much of an option where it goes, and the refiners in the Midwest don’t have much of an option on where they get the feedstock.”
The Gulf Coast refineries, which depend on Mexican crude, may find it easier to source alternative supplies from the global market, but this will come at a higher cost. Meanwhile, East Coast consumers are also likely to see price hikes, as the region is heavily dependent on refined fuel from Gulf Coast refineries and imports from Irving Oil’s refinery in New Brunswick, which will also be subject to a 10% tariff.
As the wholesale fuel market braces for cost increases, energy suppliers warn that price hikes are inevitable.
“Whatever the cost is, ultimately it ends up in the consumer’s lap, and there’s nothing we can do about it,” said Alex Ryan, energy director at Oasis Energy, Kansas.
While some refiners have stockpiled Canadian oil in anticipation of the tariffs, the cost burden remains unavoidable. LaForge predicts that U.S. drivers should prepare for a sustained period of high fuel costs, stating:
“Any way you cut it, you’re looking at higher prices.”
With inflation and the cost of living already top concerns for American households, the impact of these tariffs on fuel, transportation, and overall consumer prices is expected to be significant. As the trade dispute between the U.S., Canada, and Mexico escalates, consumers will bear the financial consequences at the pump in the months ahead.