New York
CNN
—
The US tariffs on Canadian fuel imports could hit some parts of the country harder than others.
The Northeast could see that change first, according to experts, and prices are also at risk of rising on the West Coast. But even those potential hikes would be unlikely to be come immediately.
The tariffs put in place Tuesday were 25% for most imports but only 10% for energy products.
While US domestic oil production reached a world record 4.7 billion barrels of oil in 2024, Canada is still a major source of oil for the United States, shipping 1.5 billion barrels of crude oil to the US market last year. Mexico, whose energy exports to the United States also face a 25% tariff, is the second-largest source of oil for the United States, shipping 166 million barrels north of the border. That’s about two-thirds more than the US imports from Saudi Arabia.
Any rise in gasoline prices could add to worries that President Donald Trump’s tariffs will ratchet up inflation for Americans already weary from years of price increases, which he promised during and after his presidential campaign to bring down on his first day in office.
The good news for drivers is that gas prices are relatively low now, an average of $3.11 a gallon nationwide according to AAA, up only one cent from the last several days and down about two cents since Trump took office. That could cushion the impact as gas stations start to bring prices higher. The average price in Massachusetts was unchanged at $3.01 a gallon. Prices were down one cent in both Washington State and California, although both are above $4 a gallon, well above the national average already.
The pain at the pump will hit differently across the country because there’s no single market for gasoline here. Different parts of the country get their crude, gas or diesel from different places through different delivery methods.
For example, a large part of Northeast gasoline supply comes from Canada’s largest refinery, in Saint John, New Brunswick, run by Irving Oil. Irving has told customers it will not cover the increased cost from the tariffs, which could add 20 to 25 cents to a gallon of gas. Experts told CNN that because Irving sends its gas to the US by ship, it can easily redirect shipments to markets where it won’t face tariffs.
“Where they are in Canada, the world is their oyster,” said Tom Kloza, global head of energy analysis for OPIS.
Less oil from Irving means reduced supply, which would likely drive up prices. Even stations that don’t get their gas from Irving could raise prices if they see price hikes from rivals who do get their fuel from Iriving, said Andy Lipow, an analyst with Lipow Oil Associates.
But much of Canada’s energy products move in pipelines from oil fields to US refineries in the Midwest and Rocky Mountain states. And the lack of alternative buyers for that crude oil could mean those Canadian producers will have a much harder time redirecting their oil.
“We’re importing about 3 million barrels of Canadian crude a day to the Midwest and Rocky Mountain region,” said Lipow. He said that the US refineries using that Canadian crude prefer it to American oil, because it’s a heavier grade that requires less oil to make the same gallon of gas.
“It’s a symbiotic relationship,” he said. But he said most of those refineries will switch away from Canadian oil companies unless the producers agree to protect their American buyers from the cost of the tariffs through a price cut.
US refineries up and down the West Coast could also see their normal supply of Canadian crude shipped overseas, resulting in tighter supply and therefore higher costs.
But gasoline still might be only a few cents a gallon more expensive anyway, because global oil markets are pushing the price of oil down right now, Kloza said. Part of that is because OPEC+, a group that includes OPEC nations as well as other non-OPEC oil exporters, such as Russia, and Mexico, agreed earlier this week to increase production.
Oil traders also worry that the US trade wars with its major trading partners could push multiple countries falling into recession, Kloza said. Nothing drives down oil consumption, and oil prices, faster than a recession.
Brent crude oil prices closed Tuesday down 1%, the fifth decline in six trading days and a six-month low for that global benchmark. West Texas Intermediary oil, a better measure of North American prices, has had a similar decline.
