Trump’s Tariffs on Canadian and Mexican Oil to Drive Up U.S. Gas Prices

U.S. consumers can expect higher fuel prices following President Donald Trump’s decision to impose tariffs on Canadian and Mexican oil. Analysts warn that the move, aimed at pressuring U.S. neighbors to curb illegal immigration and drug smuggling, could also contribute to inflation.

The U.S. imports around 4 million barrels per day (bpd) of Canadian oil—70% refined in the Midwest—and 450,000 bpd from Mexico, mainly used by Gulf Coast refiners. The new tariffs, set at 10% for Canadian energy products and 25% for Mexican imports, will increase refining costs, leading to higher prices at the pump.

GasBuddy analyst Patrick De Haan predicts noticeable fuel price hikes, with greater impacts the longer the tariffs remain. The American Fuel and Petrochemical Manufacturers Association hopes for a reversal before consumers feel the effects.

Trump’s initial 25% tariff plan was revised to lessen the impact on energy costs, but the move still disrupts North America's deeply interconnected oil market. Wells Fargo’s John LaForge highlights the challenge: Canadian oil producers rely on U.S. refiners, and Midwest refineries are optimized for heavy Canadian crude. While Gulf Coast refiners may find alternative suppliers, Midwest refiners have limited options.

East Coast drivers could also see higher costs. The region’s refining capacity covers only half its fuel demand, with the Colonial Pipeline already operating at full capacity. Irving Oil’s refinery in New Brunswick, a key supplier, now faces a 10% tariff, potentially driving up costs further.

Wholesale fuel suppliers say price increases are inevitable, as the added costs will ultimately be passed to consumers. Analysts agree: no matter how the situation unfolds, Americans should brace for rising gas prices.