Alberta oil professionals and experts say that the declared intention of the president of the United States, Donald Trump, to impose a 10 percent rate on Canada’s oil, is not a good omen for the industry and will probably harm the American consumers, although the situation could be much worse.
Trump said Friday that the oil on oil “probably” would be established at 10 percent compared to 25 percent tariffs on other goods, but it was not clear if the lowest rate would apply from the beginning.
Canada are the Americans’ No. 1 source of oil imports. Sixty percent of American crude oil imports were obtained from Canada in 2022, while Mexico was the following most valuable supplier in the United States, which represents only 10 percent of those imports compared.
Prime Minister Danielle Smith’s office issued a statement on Friday about the possibility of a 10 percent rate on Canadian oil.
“The prime minister is waiting, along with everyone else, to see the details of the American tariffs announced today. She will have more to say as soon as we see those details,” says the statement.
“The prime minister has been clear from the beginning that any tariff imposed by the United States on Canadian goods will harm US and Canadian consumers, workers and companies. That opinion has not changed.”
Richard Masson, executive member of the Faculty of Public Policies of the University of Calgary and former CEO of the Alberta Petroleum Marketing Commission, described the possibility that a 10 percent rate on oil is a small victory compared to comparison with 25 percent.
“Clearly, it will not be useful. We have an integrated energy system and the United States trusts us, and putting a tariff on the oil that will import will not be good for them and probably won” s being good for us, “he said The veteran of the industry.
He adds that the devil is in the details about possible levies and there are still many uncertainties that surround how these rates could develop and who could endure the worst part of them. Depending on how things go, any of the countries could end up being negatively affected.
“In my opinion, 10 percent, it is more likely that refiners have that cost than producers. If it were 25 percent, I think there could be a great drop in the demand for our oil over the course of two or three months and that would push us more. [the U.S. is] I will have to endure it as refiners, “Masson said.
Deborah Yedlin, president and executive director of the Chamber of Commerce of Calgary, says that the threat of tariffs has an incredible amount of uncertainty and could have high reach impacts in the business community of the city.
“The level of uncertainty and anxiety we hear from people is no different from what was felt during the 2008 financial crisis,” he said. “No one knows exactly what will happen because we don’t have all the information. And until we have all the information, we don’t really know what the impact will be.”
Yedlin says that applying tariffs to Canadian oil will probably affect the price of gasoline in the United States and questioned Trump’s objectives.
“Is it really border security … or is it really about punishing the Canadian economy and the US economy?” She said. “It is an inflationary movement, and it will affect both companies in Canada and the United States.”
Paul Colborne, president and CEO of Energy, an exploration and production company centered on oil based in Calgary, says from the perspective of an oil producer, a 10 percent tax on Canadian oil is a good reasonable result For the Alberta industry in opposition to a 25 percent rate.
Add a wave prepared for the possibility of tariffs accordingly, and 10 percent will not significantly affect the company.
“In our case, it is a business as usual for the increase because we cover it, and any fragment that we do not cover will get 10 percent higher,” he said.
Some Canadian oil producers have been trying to protect from the potential of the rate by covering their risks, which implies signing contracts to block the price of oil that will be sold during the months or year.
“So we will not really change our corporate estimates for this year, our capital expenditure or anything. I think that is a large extent for any oil producer.”
He proves the probable 10 percent tariff on Canada’s oil as a result of the diplomatic efforts of the prime minister in the United States.
“I think Danielle Smith was brilliant to go down and see [Trump and] Reaffirm that we are its business partners, we are 120 -year -old business partners, “said Colborne.” I was doing what I think the prime minister should have done. “
Adam Legge, president of the Alberta Business Council, says that if the president of the United States advances with the implementation of tariffs, he will feel disappointed.
He says that Canada and the United States have a strong and long -standing commercial relationship and that applying tariffs to Canadian goods would undermine that.
“The fact that it is penalizing Canada, Mexico more than China is, I think, frankly, it is offensive to the relationship,” said Legge, who was at the Canadian embassy in Washington, DC, for the inauguration.
What are the next steps?
Legge says that in the meantime, Canada should continue his diplomatic efforts to address Trump’s concerns about the border and the expenditure of Canada in National Defense, among others.
He says that if addressing these concerns does not deter tariffs implementation, Albert .
“[We should be] Trying to convince Americans to abandon this frankly terrible commercial policy idea … and convince the president that this is just a losing game for all parties, “Legge said.
“[We need] To show that we can give [Trump] A victory. That is what he wants … if we can try to kill him kindly and win it with some of those efforts, then maybe that can address some of these rates. “
The former CEO of the Alberta Petroleum Marketing Commission, Richard Masson, says he anticipates that oil producers will continue trying to deter the United States, to reverse the course about their intention to bring tariffs. He says trying to convince Trump so that he does not continue with them is still the best option.
“I think people will press the case with force during the next 18 days to tell the president: ‘This will still harm their consumers … increase the price of gasoline. You will not have a lot of happy consumers in The swing declare that they only voted for you.
Colborne says that Canada’s oil industry should consider expanding which countries can sell. Ask the country to explore the sale to European markets, as well as emphasized the importance of pipes for places other than the United States.
“I think some of the projects that were in the books when [prime minister] Stephen Harper left office would have been a good thing. So, hopefully, the other people in Canada see how important the oil industry is and opening markets to places other than the US. It is something really good. “