By Nicole Jao
NEW YORK (Reuters) – U.S. retail gasoline prices are set to climb in the coming weeks as new tariffs imposed by the administration of President Donald Trump raise the cost of energy imports, according to traders and analysts.
The outlook underscores a potentially unintended consequence of Trump’s protectionist trade policies, which are meant to boost the U.S. economy but could instead lead to bigger bills for consumers.
A 25% tariff on all imports from Mexico, a 10% tariff on Canadian energy and a doubling of duties on Chinese goods to 20% came into effect on Tuesday. The Trump administration also imposed 25% tariffs on all other Canadian imports.
That has already triggered a surge in wholesale gasoline prices in the U.S. Northeast, a region that relies heavily on Canadian shipments of gasoline, heating oil and diesel, according to fuel distributor TACenergy.
That hike will start filtering through to New England’s pumps soon, and could add 20 to 40 cents a gallon, retail fuel experts said.
“If you’re filling up in the Northeast, you’ll see price increases first and more significantly,” GasBuddy analyst Patrick De Haan said in a blog post on Tuesday.
Canadian refiner Irving Oil, the top supplier of refined fuels to the Northeast, increased prices on fuel products on Tuesday to reflect the tariff costs, De Haan said.
An Irving Oil representative was not immediately available to comment. The company has previously said tariffs would force up its prices to U.S. customers.
Irving’s 320,000-barrel-per-day refinery in Saint John, New Brunswick, exports more than half its finished fuels to the Northeast, the company’s website shows.
“There’s simply no simple replacement for the products shipped from Irving Oil’s refinery. That’s the primary supply point for multiple terminals in the area,” TACenergy said in a market commentary published Tuesday morning.
Other regions that rely heavily on crude oil imports from Canada and Mexico will also soon see a spike in fuel prices, experts said.
U.S. imports some 4 million barrels per day of Canadian oil, 70% of which is processed by refineries in the Midwest that are specifically designed to run Canadian grades.
The U.S. also imports over 450,000 bpd of Mexican oil, mainly for refiners concentrated around the U.S. Gulf Coast.
De Haan said the impact on pump prices in those regions could take longer to materialize as crude oil must first be refined into fuel products.
Parts of the Midwest could see a 10- to 15-cent jump in pump prices over the next few weeks, Alex Ryan, energy director at Kansas-based Oasis Energy, told Reuters.
Average U.S. pump prices were holding steady as of Tuesday at $3.099 a gallon, from $3.097 a gallon on Monday. They remained about 8% lower than a year ago, data from the American Automobile Association showed.
An AAA spokesperson said the ultimate impact of tariffs on gas prices over the coming weeks and months was difficult to predict, and upward pressure could be offset by other factors.
“Tariffs can play a role in gas prices, but so do other factors like the price of crude oil, which right now is on the lower side,” she said.
Oil industry representatives have said they oppose the tariffs because they force higher costs on the industry.
Imposing tariffs on energy, refined products and petrochemical imports will not make us more energy secure or lower costs for consumers… we continue to hope quick resolution can be found with our North American neighbors,” Chet Thompson, CEO of American Fuel and Petrochemical Manufacturers, said in a statement on Tuesday.
(Reporting by Nicole Jao in New York; additional reporting by Shariq Khan; Editing by Nia Williams)
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