'Troublesome Tariffs': How Trump's Policies Might Increase Fuel Costs
Trump has incorporated new tariffs into his standard campaign rhetoric, warning of potential rates ranging from 10 to 20 percent for the majority of imports and 60 percent for goods manufactured in China.
TroibNews 
Republican presidential nominee Donald Trump's proposed tariff on imports may significantly affect U.S. consumers, particularly at the gas pump. Trump has suggested implementing tariffs as high as 20 percent on all imported goods if he is elected. Market analysts indicate that this could impact a significant portion, if not all, of the 8 million barrels of crude oil the United States imports daily, potentially escalating a politically sensitive situation regarding consumer prices. Additionally, such tariffs could jeopardize the trade agreement with Canada, the largest supplier of imported oil to the U.S.
Although U.S. oil production has surged, leading to the nation becoming a net exporter of crude and petroleum products since late 2019, many refineries are designed to process imported crude oil grades that are not readily available in the U.S. Consequently, firms would face either the import tax or the costly challenge of adapting their equipment for domestic oil types. Analysts predict that any increase in costs will ultimately be passed on to consumers through higher gasoline prices, as noted by experts at the investment research firm BCA Research.
According to BCA Research’s chief strategists Roukaya Ibrahim and Matt Gertken, a 10 percent tariff — the lowest figure Trump has mentioned — would result in a 5 percent increase in average retail gasoline prices. This change could push the current national average from $3.35 to $3.50 per gallon.
Trump could alleviate some of the financial strain on consumers by exempting certain oil imports from his proposed tariffs, but a campaign spokesperson did not provide clarity on whether he would consider such exemptions. Trump has incorrectly claimed that it is foreign governments, rather than U.S. consumers, that bear the burden of tariffs.
While Vice President Kamala Harris's representatives did not respond to inquiries regarding the potential effects of Trump's tariff on oil prices, she has criticized his tariff suggestions, arguing they would effectively serve as "a national sales tax." In response, Trump has derided Harris's proposals to address corporate price-gouging, comparing them to "SOVIET Style Price Controls."
According to BCA analysts, the potential fallout from the tariff on fuel prices might compel Trump to either exempt energy commodities from the tariffs or retract them quickly once imposed.
“There would be an incentive for Trump to make large exemptions to prevent too sharp of an increase in prices, and also to negotiate solutions bilaterally with countries very quickly,” the analysts noted in an email.
Trump has been keen to incorporate new tariffs into his campaign rhetoric, threatening import tariffs of 10 to 20 percent for most goods, and up to 60 percent on items produced in China. Experts caution that these tariffs could raise consumer prices and likely trigger a trade war detrimental to U.S. exporters.
The nonpartisan Peterson Institute for International Economics recently reported that Trump’s tariffs would impose an annual cost of over $2,600 on the average American household due to the pass-through costs incurred by businesses. This would result in a significant shift of the tax burden from wealthy taxpayers to lower-income families.
The Tax Foundation also indicated that Trump's tariffs could reduce long-term economic growth by 0.8 percent, effectively negating any growth that may result from the tax cuts he has proposed.
Proponents of tariffs, including Trump, argue that taxing imports bolsters domestic manufacturers' competitiveness and fosters business expansion. However, given the U.S.'s status as a leading oil producer generating record crude volumes, even if consumers face higher gasoline costs, it’s unlikely that companies supplying the fuel would ramp up production. For various technical reasons, some U.S. refineries still depend on importing specific oil types that are more readily available in Canada and elsewhere.
Despite being a major oil-producing country, the U.S. still imports about 6 million barrels a day of crude oil, along with approximately 600,000 barrels daily of other chemicals essential for refining gasoline, diesel, and jet fuel.
When questioned about whether Trump would exempt oil from his proposed tariffs or implement measures to mitigate additional costs for consumers, campaign spokesperson Karoline Leavitt stated: "It is one of President Trump's top priorities to bring down the cost of energy that has skyrocketed under the Harris-Biden Administration. President Trump will end the Harris-Biden Administration's burdensome regulations on the energy industry to make America a net-exporter of energy again which will drive down costs and make gasoline cheap again for working American families.”
However, the U.S. is already a net exporter of crude oil and other petroleum products like gasoline and propane. Excluding processed products, the U.S. still imports about 2 million barrels daily of crude oil beyond what it exports, though this figure has significantly decreased from a peak of over 10 million barrels a day in 2005.
Analysts emphasize that gasoline prices are a crucial factor influencing public sentiment about the economy because consumers observe daily fluctuations. This was particularly evident when prices spiked to over $5 a gallon during the aftermath of the Russian invasion of Ukraine and ongoing pandemic-related supply disruptions, inciting public frustration and creating political challenges for the Biden administration.
The American Fuel and Petrochemical Manufacturers, representing gasoline producers, chose not to comment on Trump's tariff proposals. Similarly, major refining companies, including Marathon Petroleum and Exxon Mobil, did not provide responses, and Valero Energy, one of the country's largest fuel producers, did not answer inquiries.
Experts like Glenn Schwartz, energy policy director at the consulting agency Rapidan Energy, argue that Trump would need to exempt imported oil and fuel from any tariffs to avoid public backlash.
“Obviously, if there was a 20 percent increase in either crude or [fuel] products directly, it would be pushed on to consumers in the form of a price increase,” Schwartz noted, adding that the extent of the increase would hinge on how long the tariffs remain in effect and other dynamic factors.
“Politically, we would expect Trump to make efforts to see if he could carve out exceptions for crude and [fuel] products,” Schwartz predicted. “He is very aware of the political dynamics and how difficult it is for presidents of any party when gas prices increase. That’s political poison.”
Should tariffs be enacted, the most significant ramifications might arise from oil imports originating from Canada, which accounted for over half of the 8.5 million barrels a day of oil and refined products imported last year.
The treaties in place, such as the United States-Mexico-Canada Agreement free trade deal signed by Trump in 2020, are expected to shield Canadian crude from tariffs and fees, explained Mike Hernandez, vice president of communications at Canadian pipeline company Enbridge.
One such treaty, the 1977 Transit Pipeline Treaty, "essentially says not only can you not interrupt the flow of hydrocarbons between the two countries ... but also no tax can be applied,” Hernandez elaborated. However, he noted that tariffs could still impact steel and other manufactured items Enbridge imports to construct pipelines or renewable energy infrastructure in the U.S.
Analysts also caution that while petroleum may be excluded from tariffs, general tariffs on imports could still influence energy prices due to the additional costs imposed on steel and other materials sourced from abroad. Organizations like the American Petroleum Institute and other energy trade associations have criticized the imposition of tariffs, warning it could elevate business operational costs.
Oil industry lobbyists attempted to advocate against protectionist trade policies that could provoke retaliatory tariffs on U.S. oil and gas exports during the Republican and Democratic nominating conventions. However, one industry attorney, speaking on the condition of anonymity, expressed skepticism about the effort's success given Trump's selection of Ohio Republican Senator JD Vance as his running mate.
“I think it will be a heavy lift to convince Trump that tariffs are a bad idea,” the attorney remarked. “The selection of Sen. Vance as the Vice Presidential candidate only intensified the industry’s fears that the battle against the imposition of U.S. tariffs will be a long and difficult one.”
Olivia Brown contributed to this report for TROIB News
Although U.S. oil production has surged, leading to the nation becoming a net exporter of crude and petroleum products since late 2019, many refineries are designed to process imported crude oil grades that are not readily available in the U.S. Consequently, firms would face either the import tax or the costly challenge of adapting their equipment for domestic oil types. Analysts predict that any increase in costs will ultimately be passed on to consumers through higher gasoline prices, as noted by experts at the investment research firm BCA Research.
According to BCA Research’s chief strategists Roukaya Ibrahim and Matt Gertken, a 10 percent tariff — the lowest figure Trump has mentioned — would result in a 5 percent increase in average retail gasoline prices. This change could push the current national average from $3.35 to $3.50 per gallon.
Trump could alleviate some of the financial strain on consumers by exempting certain oil imports from his proposed tariffs, but a campaign spokesperson did not provide clarity on whether he would consider such exemptions. Trump has incorrectly claimed that it is foreign governments, rather than U.S. consumers, that bear the burden of tariffs.
While Vice President Kamala Harris's representatives did not respond to inquiries regarding the potential effects of Trump's tariff on oil prices, she has criticized his tariff suggestions, arguing they would effectively serve as "a national sales tax." In response, Trump has derided Harris's proposals to address corporate price-gouging, comparing them to "SOVIET Style Price Controls."
According to BCA analysts, the potential fallout from the tariff on fuel prices might compel Trump to either exempt energy commodities from the tariffs or retract them quickly once imposed.
“There would be an incentive for Trump to make large exemptions to prevent too sharp of an increase in prices, and also to negotiate solutions bilaterally with countries very quickly,” the analysts noted in an email.
Trump has been keen to incorporate new tariffs into his campaign rhetoric, threatening import tariffs of 10 to 20 percent for most goods, and up to 60 percent on items produced in China. Experts caution that these tariffs could raise consumer prices and likely trigger a trade war detrimental to U.S. exporters.
The nonpartisan Peterson Institute for International Economics recently reported that Trump’s tariffs would impose an annual cost of over $2,600 on the average American household due to the pass-through costs incurred by businesses. This would result in a significant shift of the tax burden from wealthy taxpayers to lower-income families.
The Tax Foundation also indicated that Trump's tariffs could reduce long-term economic growth by 0.8 percent, effectively negating any growth that may result from the tax cuts he has proposed.
Proponents of tariffs, including Trump, argue that taxing imports bolsters domestic manufacturers' competitiveness and fosters business expansion. However, given the U.S.'s status as a leading oil producer generating record crude volumes, even if consumers face higher gasoline costs, it’s unlikely that companies supplying the fuel would ramp up production. For various technical reasons, some U.S. refineries still depend on importing specific oil types that are more readily available in Canada and elsewhere.
Despite being a major oil-producing country, the U.S. still imports about 6 million barrels a day of crude oil, along with approximately 600,000 barrels daily of other chemicals essential for refining gasoline, diesel, and jet fuel.
When questioned about whether Trump would exempt oil from his proposed tariffs or implement measures to mitigate additional costs for consumers, campaign spokesperson Karoline Leavitt stated: "It is one of President Trump's top priorities to bring down the cost of energy that has skyrocketed under the Harris-Biden Administration. President Trump will end the Harris-Biden Administration's burdensome regulations on the energy industry to make America a net-exporter of energy again which will drive down costs and make gasoline cheap again for working American families.”
However, the U.S. is already a net exporter of crude oil and other petroleum products like gasoline and propane. Excluding processed products, the U.S. still imports about 2 million barrels daily of crude oil beyond what it exports, though this figure has significantly decreased from a peak of over 10 million barrels a day in 2005.
Analysts emphasize that gasoline prices are a crucial factor influencing public sentiment about the economy because consumers observe daily fluctuations. This was particularly evident when prices spiked to over $5 a gallon during the aftermath of the Russian invasion of Ukraine and ongoing pandemic-related supply disruptions, inciting public frustration and creating political challenges for the Biden administration.
The American Fuel and Petrochemical Manufacturers, representing gasoline producers, chose not to comment on Trump's tariff proposals. Similarly, major refining companies, including Marathon Petroleum and Exxon Mobil, did not provide responses, and Valero Energy, one of the country's largest fuel producers, did not answer inquiries.
Experts like Glenn Schwartz, energy policy director at the consulting agency Rapidan Energy, argue that Trump would need to exempt imported oil and fuel from any tariffs to avoid public backlash.
“Obviously, if there was a 20 percent increase in either crude or [fuel] products directly, it would be pushed on to consumers in the form of a price increase,” Schwartz noted, adding that the extent of the increase would hinge on how long the tariffs remain in effect and other dynamic factors.
“Politically, we would expect Trump to make efforts to see if he could carve out exceptions for crude and [fuel] products,” Schwartz predicted. “He is very aware of the political dynamics and how difficult it is for presidents of any party when gas prices increase. That’s political poison.”
Should tariffs be enacted, the most significant ramifications might arise from oil imports originating from Canada, which accounted for over half of the 8.5 million barrels a day of oil and refined products imported last year.
The treaties in place, such as the United States-Mexico-Canada Agreement free trade deal signed by Trump in 2020, are expected to shield Canadian crude from tariffs and fees, explained Mike Hernandez, vice president of communications at Canadian pipeline company Enbridge.
One such treaty, the 1977 Transit Pipeline Treaty, "essentially says not only can you not interrupt the flow of hydrocarbons between the two countries ... but also no tax can be applied,” Hernandez elaborated. However, he noted that tariffs could still impact steel and other manufactured items Enbridge imports to construct pipelines or renewable energy infrastructure in the U.S.
Analysts also caution that while petroleum may be excluded from tariffs, general tariffs on imports could still influence energy prices due to the additional costs imposed on steel and other materials sourced from abroad. Organizations like the American Petroleum Institute and other energy trade associations have criticized the imposition of tariffs, warning it could elevate business operational costs.
Oil industry lobbyists attempted to advocate against protectionist trade policies that could provoke retaliatory tariffs on U.S. oil and gas exports during the Republican and Democratic nominating conventions. However, one industry attorney, speaking on the condition of anonymity, expressed skepticism about the effort's success given Trump's selection of Ohio Republican Senator JD Vance as his running mate.
“I think it will be a heavy lift to convince Trump that tariffs are a bad idea,” the attorney remarked. “The selection of Sen. Vance as the Vice Presidential candidate only intensified the industry’s fears that the battle against the imposition of U.S. tariffs will be a long and difficult one.”
Olivia Brown contributed to this report for TROIB News
