Staff Reports
A looming trade standoff with Canada and Mexico is shaking up the energy landscape, and it’s got economists buzzing with concerns that this could mean a spike in energy prices across America. President Donald Trump recently reignited tariff talks aimed at throwing a wrench into the operations of our northern neighbor and southern neighbor in a bid to crack down on illegal immigration and drug trafficking. The good news? After some initial discussions, he decided to hold off on those tariffs for a month, but it’s far from smooth sailing ahead.
Expert analysis suggests that if the negotiations take a nosedive and a full-blown trade war erupts, it could spell trouble not just for gas prices but also for the overall energy sector in the U.S. Everyone knows how much Americans love their cars—so naturally, any hike in gasoline costs is likely to invite the ire of the average consumer. With the Trump administration keeping everyone on tenterhooks regarding the future of these tariffs, some are crossing their fingers and hoping that oil import channels remain unaffected. After all, those sweet crude imports are essential to keeping American refineries running.
Want to keep cool in the heat? We import nearly $6 billion in air conditioners from Mexico.
Want the lights to go on in New England? We import a lot of electricity from Quebec. These tariffs will cost this region’s consumers hundreds of millions of dollars. 7/10 pic.twitter.com/hObTnk2ZwR— Gary Winslett 🌐🇺🇸 (@GaryWinslett) February 2, 2025
While Trump is busy negotiating with Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau, he recently remarked how essential it is for the U.S. to be treated fairly in trade. He pointed out that U.S. banks face obstacles when trying to do business in Canada, setting the stage for some wholesome North American negotiating drama. He insists on a balanced trading relationship, especially since America can produce its own cars and timber. Yet, the predicaments surrounding energy imports present a snag that can’t be ignored. Importing oil is key, as the last U.S. refinery built to produce significant amounts of finished oil products dates back to 1977.
Caught in the middle of this tussle, energy economists stress that the untouchable energy sector should be spared from any tariff swings. Experts are banging the drum, advocating for a resolution that spares oil from becoming collateral damage in a tariff showdown. Almost 52% of American crude oil imports come from Canada alone, and there’s no immediate fix if the flow of oil gets stymied. Energy’s like water in an economy; you try to mess with it, and just like that water through a garden hose, everything gets chaotic.
The impact of raising energy prices could reverberate across various sectors and bite hard into everyday budgets. With inflation already making life more challenging, many urge Trump not to tinker with a tariff war that could escalate oil prices—an inevitable spark for more inflation. As individuals like Tom Pyle from the American Energy Alliance suggest, the real aim should be to keep energy affordable for the American people. Not just for convenience, but for the middle and lower classes whose wallets might feel the pressure of rising oil costs.
As the threat of energy tariffs dangles ominously, even Canadian officials are starting to reconsider their options, contemplating diversifying trade relationships, which could be a long-term strategic loss for U.S.-Canadian relations. Ontario’s Premier Doug Ford and Quebec’s François Legault are stirring up potential retaliation should tariffs be enacted, keenly aware of the delicate balance between trade cooperation and competitive posturing. Meanwhile, states like Massachusetts are bracing for spikes in heating costs, making it abundantly clear that a trade war would serve no one, especially not the blue-collar folks who feel every pinch at the pump. As negotiations continue, the hope remains that cooler heads will prevail and protect the vital energy trade that keeps America cozy and fueled.
