Trump vows tariffs on China, Mexico, Canada that may spike commodity prices
President-elect Donald Trump has pledged to impose new tariffs on all imports from China, Mexico, and Canada when he assumes office in January, a decision that could potentially disrupt trade flows and drive up commodity prices.
The US would impose an additional 10% tariff on all imports from China, on top of existing tariffs, and a 25% tariff on all products from Mexico and Canada, Trump said on his social media platform Truth Social late Nov. 25. Mexico, Canada, and China are among the US’s top trade partners.
The US imports several commodities from China, including used cooking oil, a key feedstock for producing sustainable aviation fuel. In August, the US imported 160,141.92 mt of UCO from China, rising 60% on the month, according to China’s customs data.
The US also imported 5.37 million barrels of crude and petroleum products from China over January-August, increasing from 4.6 million barrels in the same period in 2023, data from the US Energy Information Administration showed.
US imports of Mexican crude averaged 768,000 b/d for the week ended Nov. 15, reaching the highest volume since 987,000 b/d in the week ended June 7, according to the EIA.
US imports of Canadian crude averaged 3.953 million b/d in the week to Nov. 8, the highest since 4.155 million b/d in the week ended Sept. 13.
A feedstock manager at a major South Korean refiner said that “it could be interesting to see how Mexican and Canadian [crude] suppliers react though, as the tariffs could make them rely more on Asian buyers next year.”
Some North Asian refiners said they would monitor any potential slowdown in Mexican and Canadian crude flows to US refineries in 2025 that could lead to more attractive offers for Asian buyers of Isthmus, Maya crudes, Cold Lake Blend, and Western Canadian Select crudes.
Japanese refiners have been interested in buying Canadian heavy sour crudes to diversify supply sources. A market analyst from a Singapore-based Japanese trading company said the tariffs could create obstacles for Canadian crude sales to the US, while Japanese refiners might find opportunities to benefit from this situation.
Trump cited “crime and drugs” and illegal immigration as reasons for the tariffs.
“Representatives of China told me that they would institute their maximum penalty, that of death, for any drug dealers caught doing this, but unfortunately, they never followed through, and drugs are pouring into our country, mostly through Mexico, at levels never seen before,” highlighting fentanyl in particular.
“Until such time as they stop, we will be charging China an additional 10% tariff, above any additional tariffs, on all of their many products coming into the United States of America,” he said.
Trump said Mexico and Canada must solve cross-border “drug issues” and illegal immigration matters.
“Both Mexico and Canada have the absolute right and power to easily solve this long-simmering problem. We hereby demand that they use this power, and until such time that they do, it is time for them to pay a very big price!” he said.
Source: Platts