U.S. crude oil imports from Canada rose last week to the highest on record ahead of incoming U.S. President-elect Donald Trump’s plans to impose a 25 percent tariff on Canadian imports.
Data from the U.S. Energy Information Administration (EIA) showed that U.S. crude oil imports from Canada rose by 689,000 barrels a day in the week ended January 3 to 4.42 million barrels per day (bpd), the highest in records that date back to June 2010.
That was also the biggest weekly jump in imports from Canada since the week ended July 12, 2024. Canada has been the top source of U.S. oil imports for years and supplied more than 50 percent of the country’s total crude imports in 2023.
U.S. imports of crude oil fall
This surge in imports came after Trump on Tuesday threatened to use economic force to turn Canada into an American state. He previously said he would apply tariffs on imports from Canada and Mexico immediately after his inauguration on January 20. Trump previously pledged to impose big tariffs against China too, also threatening a 100 percent tariff on ‘BRICS’ nations.
Total U.S. imports of crude oil fell by 498,000 bpd to 6.43 million bpd last week, the lowest in a month.
As crude oil production has increased in Canada, so have exports to the U.S. Imports from Canada to the U.S. grew by an average of 4 percent every year from 2013 to 2023. Canada’s crude oil exports to the U.S. amounted to 24 percent of U.S. refinery throughput in 2023, an increase from 17 percent in 2013, EIA data showed.
Geographic proximity allows Canada’s pipelines to transport crude oil from the western provinces, mainly from Alberta’s large crude oil production region, to refineries in the U.S. Inland regions, particularly the Midwest and Rocky Mountains, are closely connected to Canada’s oil markets via pipeline and rail networks.
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Impact of trade tariffs on growth
If imposed permanently, the Tax Foundation estimates these tariffs would generate $1.2 trillion in tax revenue from 2025 through 2034 on a conventional basis. In the long run, it expects the tariffs to reduce GDP by 0.4 percent and employment by 344,900 jobs.
The Trump administration imposed several rounds of tariffs on goods from China, affecting more than $380 billion worth of trade at the time of implementation and amounting to a tax increase of nearly $80 billion.
The Biden administration has maintained most tariffs, except for the suspension of certain tariffs on imports from the European Union, the replacement of tariffs with tariff-rate quotas on steel and aluminum from the European Union and United Kingdom, and imports of steel from Japan.
In May 2024, the Biden administration announced additional tariffs on $18 billion of Chinese goods for a tax increase of $3.6 billion. Altogether, the trade war policies add up to $79 billion in tariffs.
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