President Donald Trump’s planned tariffs on Canadian goods, set to take effect on Tuesday, are expected to drive up energy prices for U.S. consumers, Canada’s Energy Minister Jonathan Wilkinson warned on Monday.
Wilkinson stated that the tariffs would create economic hardship for both the U.S. and Canada, calling the situation a “lose-lose proposition” for both nations. He predicted that consumers in the U.S. would see higher gasoline prices, rising electricity costs from Canadian hydroelectric power, increased home heating costs from natural gas imports, and more expensive cars.
The tariffs, which include a 25% tax on goods imported from Canada and Mexico, and 10% on energy resources from Canada, were initially set to begin on February 3. However, Trump delayed the move for one month after negotiating with Canada’s and Mexico’s leaders.
The White House has not yet commented on the situation. A White House official had said in early February that Trump opted for a lower 10% tariff on Canadian energy products instead of 25% to lessen the impact on gasoline and heating prices.
Wilkinson also warned that car prices could rise by at least $2,000 due to the tariffs.
On Sunday, U.S. Commerce Secretary Howard Lutnick indicated that the tariff rates might be reduced based on ongoing negotiations. However, Wilkinson noted that while discussions between the U.S. and Canada were progressing, it was unclear if Trump would be satisfied with the outcome.
“Ultimately, it will be the president’s decision whether to implement the tariffs,” Wilkinson said. “I’m not sure anyone knows how this will unfold.”
Trump dashed any hopes of a last-minute deal during a Monday press conference where he announced an investment from Taiwan Semiconductor. The president made it clear that the tariffs would go into effect the following day.
“They’re all set. They go into effect tomorrow,” Trump said.
U.S. refiners, like Marathon Petroleum, have warned that the tariffs could raise consumer costs, particularly on Canadian crude oil.
“We believe that the majority of that would be borne by the producer and then, to a lesser extent, the consumer,” said Marathon Petroleum CEO Maryann Mannen during the company’s earnings call on February 4.
While the U.S. is the world’s largest producer of crude oil and natural gas, many U.S. refiners rely on heavier crude imported from Canada, which is cheaper and lower in quality than domestic light crude. Refineries in the Midwest are especially dependent on Canadian crude.
In December, the U.S. imported 6.6 million barrels of crude oil per day, with more than 60% of that coming from Canada, according to the Energy Information Administration.
If the tariffs take effect, Canada is prepared to retaliate. Wilkinson said the first round of countermeasures would target products in high-volume, such as orange juice and Kentucky bourbon, rather than energy or critical minerals.
“Nothing is off the table, but I doubt that’s where we would start,” Wilkinson added.
Since Trump’s announcement that the tariffs would go into effect on March 4, U.S. crude oil prices have risen by more than 1%, while gasoline futures have jumped around 14%.
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