
David Uberti of Bloomberg reports that President Donald Trump’s threatened tariffs on Canadian and Mexican oil are raising concerns, as both countries are key suppliers to the U.S. While the U.S. energy market is closely tied to Canada, analysts warn that increased U.S. production could face shareholder pushback. Uberti reports:
The cheap Canadian oil America craves is becoming a key bargaining chip in President Trump’s threatened trade war.
The countries’ energy markets have grown increasingly intertwined in recent decades, with multibillion-dollar pipelines and sprawling refineries built for Canadians to funnel stateside the tar-like crude from booming oil fields in Alberta. Surging trade has driven down prices at the pump in the Midwest and helped transform the Gulf Coast into a global export hub.
But Trump has already jolted that relationship, promising 25% tariffs on all imports from Canada and directing federal agencies to re-evaluate trade policies with countries including America’s most important foreign oil supplier.“I think we’ll do it Feb. 1,” Trump said of imposing tariffs, speaking in the Oval Office Monday night. […]
Many leaders in the American energy industry have treated Trump’s threat of across-the-board tariffs on Canadian goods as a negotiating tactic rather than a plan of action. But those assumptions were upended last week, when Danielle Smith, premier of oil-rich Alberta, said she is “not expecting any exemptions” for crude after she met with Trump at his Florida club. […]
“We don’t need their oil and gas. We don’t need anything they have,” Trump said earlier this month.
Trump has also threatened to put tariffs on imports from Mexico, America’s second-largest supplier of foreign oil, a move that analysts say would tighten the market further. A White House spokeswoman didn’t respond to a request for comment. […]Higher demand for American oil could theoretically entice U.S. producers to pump more. But Wall Street has increasingly cracked down on drillers’ spendthrift growth plans.
If U.S. producers increase spending to grab market share from their Canadian counterparts, shareholders “are going to scream bloody murder,” said Cole Smead, CEO of Smead Capital Management. “‘Drill, baby, drill’ should be a swear word.”
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