What to watch as Trump's energy tariffs arrive
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Tiffany Herring/Axios
Oil and gas futures opened higher as theoretical tensions in President Trump's energy policy just got very real, very fast.
Why it matters: New tariffs on Canada and Mexico could raise gasoline and home heating costs in places — even though 10% Canadian energy tariffs are lower than the 25% applied to other goods.
- Canada is by far the largest source of U.S. crude oil and natural gas imports.
- And more broadly, the three nations have a deeply interconnected energy relationship that spans oil, hydropower from Canada, and more.
The big picture: The levies highlight clashes between Trump's energy and trade priorities — in this case, the lower prices that are part of his "energy dominance" agenda.
- "Tariffs on Canadian energy imports directly undermine the energy dominance and energy security narrative," TD Cowen Washington Research Group analyst John Miller tells me via email.
- "Tariffs on Mexico raise the obvious risk of retaliation on US (primarily gas) flows into that country," he adds.
- WTI, the U.S. oil benchmark, is up roughly 2.7% to the mid-$74-per-barrel range this morning, while natural gas futures have spiked nearly 9%.
Yes, but: Trump has called the penalties a way to pressure Mexico and Canada on immigration and drug flows.
- He said there might be "some pain" in a Sunday post defending the overall tariffs on Canada and Mexico — and the 10% levy on China — to prevent the "ripoff" of America.
What we're watching...
How much gasoline and other fuel costs rise, in part because Midwest refineries use lots of heavy crude from Canada that's not easily replaced.
- "[E]xpect fuel prices, including diesel, heating oil, jet fuel, gasoline, propane to rise slightly, primarily in the Great Lakes, Midwest, Rockies, and Northeastern U.S. in the days ahead," GasBuddy analyst Patrick De Haan said on X.
- He expects "localized" effects of 5-20 cents per gallon. Elsewhere, there's evidence of costs already being passed through to some New England propane customers.
The politics. Democrats are seizing on tariffs to try to flip the script on the economy after it was a major political liability in the 2024 election.
- "[I]t was Donald Trump who campaigned on lowering costs, and now it is Donald Trump who will raise them, and expects consumers to just be OK with that," Senate Minority Leader Chuck Schumer said in a statement.
OPEC+ decisions. The wider tariffs complicate OPEC+ plans to start adding barrels in April if they indeed slow the global economy.
- The penalties are a "bearish shadow" on 2025 oil demand growth and make it harder for OPEC+ to unwind cuts if they're long-lasting, Rystad Energy said in a note.
Oil and gas industry lobbying. Trade policy is the biggest divide between Trump and the oil industry, which generally backs his other energy positions.
- Thus far the industry response has been rather muted in public, with careful statements rather than putting Trump on blast.
- The American Petroleum Institute said it hopes to work with Trump on "exclusions that protect energy affordability for consumers, expand the nation's energy advantage and support American jobs."
What's next: The tariffs take effect Tuesday, but we're also watching for more wrinkles and fine print.
- "The orders do not appear to include any mechanism for importers to request tariff exclusions. We think such a process could emerge in the days and weeks after the tariffs go into effect," ClearView Energy Partners said in a note.
