Oil Prices Sink 3% as Trump Hits Pause on Canada Tariffs

Oil Prices Sink 3% as Trump Hits Pause on Canada Tariffs | OilPrice.com

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Breaking News:

ByIrina Slav– Feb 04, 2025, 8:29 AM CST

Just two days after announcing sweeping sanctions of 25% on almost all Canadian imports as well as all Mexican imports, President Trump promised to pause the implementation of the levies for 30 days following urgent talks with the leaders of the two countries.

Oil markets reacted, with WTI dropping 3.3% and Brent falling 2.3%. Natural gas prices also fell significantly, shedding 5.2% in early trading.

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The talks, according to a Reuters report, resulted in commitments by both Canada and Mexico to boost border controls, including deploying more personnel to stem the flow of migrants and stepping up drug traffic control measures.

“As President, it is my responsibility to ensure the safety of ALL Americans, and I am doing just that. I am very pleased with this initial outcome,” Trump said, adding that he planned to negotiate new trade deals with both Canada and Mexico over the next 30 days.

Canada is the biggest supplier of heavy crude to American refiners, exporting it at a rate of close to 4 million barrels daily, which makes it the biggest exporter of crude oil to the U.S. in general. Mexican crude oil exports north of the border are much smaller, at less than half a million barrels daily, but they still comprise the second-largest share of foreign oil in U.S. refiners’ mix. That fact may have played a role in Trump’s willingness to negotiate new trade deals quickly before the tariffs kick in and retaliation begins.

Such a deal with China, however, appears to not be forthcoming, meaning the 10% additional tariffs on Chinese imports are still due to take effect officially today. Reuters cited a White House spokesperson as saying President Trump had no scheduled talks with China’s Xi Jinping until the end of the week.

“China hopefully is going to stop sending us fentanyl, and if they’re not, the tariffs are going to go substantially higher,” Trump has threatened. China has called fentanyl a U.S. and not a Chinese problem.

By Irina Slav for Oilprice.com

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