RPT: How Trump's proposed tariffs could affect commodities and energy
Donald Trump, the president-elect of the United States, pledged on Monday to impose tariffs on three of its largest trading partners: Canada Mexico and China. He explained how he would implement his campaign promises which could lead to trade wars.
The following commodities and energy sectors may be affected.
According to government statistics, Canada will export energy products worth $177.19 billion to the United States by 2023.
Canada's crude oil imports account for more than one fifth of the total amount of oil processed by U.S. refineries. Around 70% of Canadian barrels imported by U.S. refiners in the Midwest, which includes Chicago and Detroit, are used to supply that area.
These Midwest refineries are designed to run heavier oils and they would struggle to find an alternative to Canadian oil. They may also have to pay a higher cost if the Canadian oil was subject to tariffs. This could increase fuel prices in the Midwest.
Data from the U.S. Department of Energy revealed that in 2024 the U.S. will import about 5.2 millions barrels of crude oil and petroleum products (bpd) per day from Canada and Mexico, with over 4 million of those coming from Canada.
According to the Canadian Energy Regulator, Canadian crude oil imports to the United States will exceed $110 billion in 2023.
According to the EIA's latest data, the U.S. imported natural gas from Canada and Mexico at a rate of about 8.5 billion cubic foot per day (bcfd).
According to the Canada Energy Regulator, total natural gas exports will be around $6 billion by 2023.
The majority of the gas imported this year - 8.4 bcfd -- came from Canada via pipelines. This compares to an annual average of 8.4 bcfd in gas imports from Canada for 2023, and an average 7.6 bcfd during the last five years.
Gas imports of 0.1 billion cubic feet per day (bcfd) so far in this year have come from pipelines coming from Mexico, LNG from Canada and Trinidad and Tobago and CNG from Canada.
According to the EIA, the U.S. exported 20.8 billion cubic feet per day (bcfd) of gas in the first eight-month period of 2024. This included about 2.7 billion cubic feet per day going to Canada by pipeline, about 6.4 million cubic feet per day going to Mexico through pipeline, and about 11.7 billion cubic foot of LNG going to different countries.
Calculations using U.S. Henry hub gas prices show that the value of U.S. exports in the first eight-month period was approximately $11.0 billion.
AGRICULTURE
According to the U.S. Department of Agriculture, the U.S. imported $40.1billion of Canadian agricultural products in the past year. This made Canada the second largest source of U.S. agriculture imports, behind Mexico.
As part of a cross-border, integrated livestock production and processing industry, the United States imported more than $3 billion worth of Canadian beef, $1.1 billion worth of pork, and $2 billion worth of live animals last year.
Canada supplies nearly half the United States' imports of lumber, other forest products and vegetable oils.
Mexico will be a major source of agricultural imports for the United States in 2023.
According to the USDA, Mexico is responsible for about two-thirds (or 65%) of all U.S. fruit and vegetable imports. This includes avocados, orange juice and strawberries.
Imports of Mexican mezcal and tequila, both used to make cocktails such as margaritas, totaled $4.66 Billion in 2023. This is up 160% from 2019.
Mexico exports over 1 million cattle to the United States each year.
In the season 2023/24 (Oct.-Sept.), the U.S. imported 521,00 short tons of Mexican sugar under a bilateral agreement that reduced the import taxes for sugar from Mexico. This was almost 15% of the 3.76 million short tonnage of sugar imported by the U.S. in last season.
POTASH
According to USDA data, the U.S. imported 13 million tons potash in 2013. Of that amount, 85% was from Canada.
(source: Reuters)
