Oil prices react to fresh US tariffs
The global oil market was rattled after Donald Trump imposed tariffs of up to 25% on Canada, Mexico and China, effective tomorrow.
PHOTO: 47th US President Donald Trump addressing a presidential campaign rally. Trump's official Facebook page.
Washington has imposed fresh tariffs of up to 25% on Canadian and Mexican goods and 10% on imports from China, the White House said in a statement. For Canadian energy products, the Trump administration decided to impose a tariff of only 10%.
“Oil prices have rallied on the back of US tariffs imposed on imports from Canada, Mexico and China,” two analysts from ING Bank said.
Essentially, tariffs push up feedstock costs for US refiners, which creates a burden that is eventually passed on to consumers.
Canada is a key supplier of crude oil to the US, with the latter importing about 4 million b/d of crude oil from Canada, Reuters reports.
“If Canada had a more sizeable export infrastructure allowing it to export to other external markets, Canadian oil producers would feel less pain from these tariffs,” ING Bank’s analysts said.
Canada has also hit back with 25% tariffs on $107 billion worth of US imports, while Mexico is expected to announce some measures to retaliate the US tariffs.
Oil investors are now waiting to see the impact of the new tariffs imposed by the US. Market participants fear that this move could trigger a tariff war globally.
“In the short term, the main concerns are his [Trump's] foreign policies and how they may increase the risk of supply disruptions,” ANZ Bank’s senior commodities strategist Daniel Hynes remarked.
By Aparupa Mazumder
Please get in touch with comments or additional info to news@engine.online
