Trump’s tariff chaos causing ‘a lot of uncertainty’ in oil markets: strategist
U.S. President Donald Trump’s flurry of tariff threats, announcements and reversals has created major volatility in oil markets already grappling with a changing demand outlook and geopolitical tensions, according to one market watcher.
“There’s certainly been a lot of policy uncertainty emanating from Washington,” Helima Croft, head of global commodity strategy at RBC Capital Markets, told BNN Bloomberg in a Friday interview.
“It really is becoming like and hour-by-hour decision as we watch to see what is really going to be the impact of tariffs from Washington on Canadian crude imports.”
Croft noted that with Trump’s latest exemption – a delay on tariffs for goods covered within the existing CUSMA free trade agreement until next month – the bulk of Canadian oil exports to the U.S. will be free from tariffs for now.
“But the decision will be coming up again in April, so it’s not easy to plan the outlook when you have this many rolling tariff decisions and no finality,” she explained.
“There’s also a broader concern because you have tariffs on China and potentially tariffs looming with the EU, so it’s raising a lot of concerns about what the overall demand impact will be from these measures.”
Croft said that if tariffs ultimately are imposed on Canadian oil entering the U.S. for a significant period of time, American consumers, particularly in the Midwest, can expect to see higher gas prices.
“We would be looking at potentially around 15 cents a gallon (more) for consumers in the Midwest,” she said.
“I think that was part of the reason why Canadian crude had a lower tariff than other goods. I think there was a discussion likely in the White House about what the impact would be on U.S. drivers in the Midwest if they went forward with full tariffs that were initially being applied to other goods.”
Before Trump’s various carve-outs and delays, Canadian energy exports to the U.S. were set to be subject to a 10 per cent levy; lower than the 25 per cent tariff applied to all other products.
Croft said that any tariff on Canadian crude would only hamper Trump’s ability to keep his repeated promise to American consumers to bring down the price of oil and gasoline.
She noted that these seemingly conflicting objectives have made it hard for oil investors to guess Trump’s next move.
“So, it’s hard to sort of look at the direction of travel in policy and say whether it’s going to be bearish for oil or bullish for oil,” said Croft.
“It’s all a lot of uncertainty and again, it’s causing volatility in the price of oil.”
This article was first reported by BNN Bloomberg
