The United States on Tuesday walked back tariffs scheduled to take effect that day on goods imported from Canada and Mexico – at least delaying what would have included a 10% levy on imports of Canadian base oils and finished lubricants.
The U.S. is a large importer of base oils, and Canada is one of its main sources for those imports. In 2023 the U.S. imported 16.3 million barrels of base oil, 3.6 million of which came from Canada. That made Canada the third-largest source that year, behind Qatar and South Korea at 4.3 million barrels and 3.9 million barrels, respectively.
The 10% levy that U.S. President Donald Trump had vowed to impose on imports of Canadian energy products was a concession from the 25% tariffs he had threatened to lay on all other products from both Canada and Mexico. Trump had said he was imposing the tariffs against Mexico and Canada for not doing enough to stem the flow of illegal immigrants and drugs such as fentanyl into the U.S. He also lauds tariffs as an attractive means of raising money and protecting American businesses.
Most illegal immigrants to the U.S. cross over from Mexico, though many come from countries in Central and South America. Seizures and other evidence suggests that most illegal drugs smuggled into the country come over the same border and only a small fraction from Canada.
Trump tabled the tariffs against the two U.S. neighbors after conversations with Mexico’s President Claudia Sheinbaum and outgoing Canadian Prime Minister Justin Trudeau. Both said they would take some steps to curb cross-border drug trafficking, largely pledging measures they had previously announced.
Energy and refined oil products were to be taxed an extra 10%, including finished lubricants and base oil, as well as crude oil feedstock.
China, Canada and Mexico are the U.S.’s three largest trading partners, and most economists have said Trump’s tariffs would push up prices in the United States. All three countries had prepared to impose counter tariffs on U.S. exports, and China followed through on doing so.