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Canada, Mexico May Divert Oil Exports to Asia Amid Potential US Tariffs
Potential 25% US import tariffs on Canadian and Mexican crude under President-elect Trump’s trade policy could force these nations to cut prices and redirect supply to Asia, analysts warn.
ND
by News Desk
2024-11-28
Canada, Mexico May Divert Oil Exports to Asia Amid Potential US Tariffs

The potential imposition of 25% import tariffs on crude oil from Canada and Mexico by US President-elect Donald Trump could trigger a significant shift in global oil trade dynamics, pushing these countries to seek alternative markets in Asia, experts say.

According to Reuters, Canada and Mexico—the two largest crude exporters to the US—supply 52% and 11% of total US imports. The proposed tariffs aim to reduce reliance on foreign oil but may have unintended consequences, including:

Key Impacts:

  • Price Reductions: Canadian and Mexican oil producers may need to offer steeper discounts to Asian refiners to offset higher shipping costs and attract demand.
  • Revenue Loss: Tariffs could erode revenues for oil exporters unable to fully reroute supplies.
  • Market Diversification: Asian markets, particularly China and India, are expected to absorb redirected oil due to their refining capacity for heavy, high-sulphur crude.

Trade Adjustments:

  • Canada: Exports to Asia have already increased by 65% in 2024, thanks to the Trans-Mountain pipeline expansion.
  • Mexico: Exports to Europe may also see slight gains, though Asia remains the more likely destination for surplus oil.

Expert Opinions:

Daan Struyven of Goldman Sachs noted that “Canadian producers face deeper discounts if unable to reroute barrels.”

Meanwhile, Anh Pham, an LSEG analyst, pointed out that Asia’s refining capabilities for heavy crude make it the most viable market for diverted exports.

However, scepticism remains regarding the implementation of these tariffs. Analysts argue that the move could hurt US consumers by driving up inflation and refining costs.

The Bigger Picture:

While the tariffs align with Trump’s protectionist agenda, their economic and geopolitical implications could reshape global oil markets, particularly as nations diversify supply chains to mitigate trade disruptions.
Tagged:

GlobalOilMarket

USImportTariffs

CanadaOil

MexicoCrude

TrumpPolicy
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