Here’s How U.S. Oil Tariffs Could Reshape Global Crude Markets

A proposed U.S. oil tariff could hit foreign producers with $10 billion in costs annually, according to Goldman Sachs.

With few alternative buyers, Canadian and Latin American heavy crude suppliers rely heavily on U.S. refiners, which have the specialized capacity to process these grades efficiently.

President Trump is set to impose a 25% tariff on Mexican crude and a 10% levy on Canadian oil in March, pushing back the timeline from an earlier plan. Despite this, Goldman believes the U.S. will remain the dominant buyer of heavy crude due to its refining infrastructure and cost advantages.

The bank estimates that light oil prices would need to climb by 50 cents per barrel to make Middle Eastern medium crude a more viable option for Asian refiners. U.S. refiners, meanwhile, are expected to favor domestic light crude over imported alternatives.

Goldman projects that U.S. consumers could bear $22 billion in annual tariff-related costs, while the government stands to collect $20 billion in revenue. However, refiners and traders might benefit by $12 billion as they leverage discounted U.S. light crude and foreign heavy crude for sales in premium markets.

Canada, as the top oil exporter to the U.S., will likely keep its 3.8 million barrels per day of pipeline shipments flowing, with price reductions offsetting the tariff’s impact. Similarly, imports of 1.2 million barrels per day of heavy crude from Canada, Mexico, and Venezuela are expected to continue, with discounts ensuring their competitiveness.

While these tariffs may alter trade dynamics, Goldman points out that Canadian producers, lacking alternative buyers, will likely have to absorb much of the added costs through lower prices in order to maintain access to the U.S. market.