Goldman Sachs: Proposed U.S. Oil Tariffs Could Cost Foreign Producers $10 Billion Annually

Goldman Sachs has warned that a proposed 10% tariff on foreign oil imports could cost producers outside the U.S. up to $10 billion annually. President Donald Trump plans to impose a 25% tariff on Mexican crude and a 10% levy on Canadian crude starting in March, though this is a delay from his initial proposal. Despite these tariffs, the U.S. is expected to remain the primary market for heavy crude, given its advanced refining capabilities and cost advantages.

The investment bank estimates that U.S. consumers would bear an annual tariff cost of $22 billion, while the government could generate $20 billion in revenue. Meanwhile, refiners and traders may benefit by $12 billion as they take advantage of discounted U.S. light crude and foreign heavy crude in premium coastal markets. Goldman also noted that light oil prices would need to rise by 50 cents per barrel for Middle Eastern medium crude to become more attractive to Asian refiners.

Canadian oil producers, who export 3.8 million barrels per day via pipelines to the U.S., are likely to see price discounts offset the tariff impact. Similarly, 1.2 million barrels per day of seaborne heavy crude imports from Canada, Mexico, and Venezuela would continue flowing into the U.S. at discounted rates. As “captured sellers” with limited alternative buyers, Canadian producers would bear much of the tariff burden to stay competitive in the American market.

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