Americans should expect prices at their gas stations to increase as a result of President Donald Trump’s border tariffs on Canada, but it may not be as drastic as feared.
As of Monday, Trump’s 25% levy on all goods from Canada, except for energy products like oil and natural gas which face a 10% tariff, was still set to go into effect.
The president announced the border tariffs over the weekend, initially targeting all goods from Mexico and Canada, as well as an additional 10% tariff on China. Trump has since delayed the Mexican tariffs by one month for further negotiations with Mexican President Claudia Sheinbaum who agreed to send 10,000 soldiers to the southern border of the U.S. to curb drug trafficking and illegal border crossings.
A similar delay for Canada is doubtful, as Trump told reporters Monday afternoon that he didn’t know what the country could offer to hold off the tariffs set to be imposed one day later.
While it will likely take several weeks to feel some of the effects of the tariffs, particularly on products like unrefined oil, consumers are expected to see the costs of goods like gasoline and diesel rise. However, the severity would depend on location.
Patrick De Haan, head of petroleum analysis at GasBuddy, told the Washington Examiner that as different regions of the U.S. import various types of product, when and how much prices increase will also likely differ.
Areas like the Great Lakes, Midwest, and Rocky Mountains traditionally import Canadian crude that is later refined within the U.S. Meanwhile, New England primarily imports already refined products, such as propane, diesel, heating oil, and gasoline. As these products are refined before entering the U.S. and can get to the consumer faster, price increases would also likely be felt in the region first.
De Haan estimated that New England will see a price jump of around $0.15 to $0.25 a gallon. Similar price increases may not hit refining areas like the Midwest for several weeks. These regions could also see a greater price disparity, with increases anywhere from $0.05 to $0.20 a gallon, he said.
As Americans brace for the high prices, De Haan warned it will be coinciding with typical seasonal price increases expected in the first half of the year. In December, GasBuddy estimated that gas prices would rise by upwards of $0.60 a gallon.
“We’re not going to see record setting prices this year,” De Haan said, adding that “the normal seasonal rise could be slightly more noticeable this year if the tariffs move forward and are implemented for more than multiple weeks.”
For days, major players within the energy industry urged the Republican president to completely exclude energy products from the tariffs, given how much U.S. refineries rely on imports of Canadian oil and gas.
The U.S. has imported millions of barrels of crude oil from Canada on a daily basis for decades. Canada and Mexico combined supply more than 71% of U.S. crude imports, with Canada making up 60% alone. In July of last year, U.S. imports reached record levels, hitting 4.3 million barrels a day, according to the Energy Information Administration.
The American Petroleum Institute emphasized the importance of these imports one day before Trump announced the tariffs, saying the Canadian crude is “critical for transportation, agriculture and American consumers.”
The U.S. Chamber of Commerce criticized the tariffs over the weekend, saying they are “unprecedented, won’t solve these problems, and will only raise prices for American families and upend supply chains.”
Local politicians in the Midwest have also taken aim at the tariffs and the impact they could leave on families.
“Let’s call these tariffs what they are: Trump’s Taxes on Working Families. If these tariffs remain in place, it will jack up the price of groceries and goods, make gas more expensive, and raise utility bills,” Illinois Gov. JB Pritzker said in a Saturday statement.
While it remains unclear how long gas prices could be affected by the 10% tariff, some in the industry have indicated that it won’t leave dramatic long-term effects on the market. In a recent note obtained by Bloomberg, Goldman Sachs indicated gasoline price increases would be “temporary.”
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With the tariff set to go into effect, the Wall Street bank has not adjusted its oil price forecasts for this and next year, indicating they expect limited damage.
As of Monday, the national average price for gas sat at $3.098, according to estimates calculated by AAA.