Cheaper Canadian, Mexican oil to flow into Asia if Trump slaps tariffs

Two sources familiar with Trump’s plan said that oil would not be exempted from potential tariff hikes on imports from Canada and Mexico, despite the US oil industry’s warnings that the policy could hurt consumers, industry and national security.

The United States accounts for 61 per cent of waterborne flows from Canada, and 56 per cent from Mexico, respectively, ship tracking data from Kpler showed.

Canadian waterborne crude exports have jumped 65 per cent to about 530,000 barrels per day (bpd) in 2024, the data showed, after the opening of the expanded Trans-Mountain pipeline increased shipments to the US and Asia.

“The Canadian producers, if they face export constraints, if they’re not able to reroute their barrels that previously were exported to US to other markets, may face deeper discounts and may also suffer some revenue losses,” Daan Struyven, co-head of global commodities research at Goldman Sachs said.

Canada and Mexico export mainly heavy high-sulphur crude that is processed by complex refineries in the US and most of Asia.

“The impact is all on the heavy grades. What are the US refiners going to do? Even Saudi Arabian heavy crude is limited,” a Singapore-based trader said, adding that some US refiners can only receive crude via pipelines, limiting their options for imports.