In his 2024 U.S. presidential campaign, Donald Trump recently proposed significant import taxes aimed at boosting domestic production and bringing manufacturing jobs back to the United States. These proposed tariffs, which could reach 20% on all imports and up to 60% on some Chinese goods, have triggered contrasting responses within the energy sector.
The oil industry, highly dependent on crude oil imports, is concerned about the impact of these taxes on production costs. In 2023, the United States imported an average of 6.4 million barrels of crude oil per day, primarily from Canada, a critical supply source for many refineries. According to the American Petroleum Institute (API), an increase in import costs due to these taxes could drive up gasoline prices, directly affecting consumers.
The oil industry’s concern over increased costs
The American Petroleum Institute (API), a key representative of the American oil industry, has voiced its concerns. Justin Prendergast, an API spokesperson, highlights that these tariffs could not only raise the cost of crude oil imports but also impact the supply of materials needed for drilling and production. As a result, many U.S. refineries, which are optimized for processing imported crude oil, may face higher production costs, leading to increased gas prices at the pump for consumers.
Prendergast adds that reconfiguring infrastructure to adapt to local supply sources would be costly and challenging in the short term. Consequently, many refineries might opt to continue importing despite the tariffs, leading to additional expenses that would be passed on to the domestic market.
An opportunity for biofuel producers
In contrast, the biofuels industry sees a more positive outlook. Biofuel producers, who convert raw materials such as corn and soybeans into fuel, hope that these tariffs will limit foreign competition and encourage local production. The Renewable Fuels Association (RFA), which represents the biofuels industry, has expressed cautious support for targeted regulation. Geoff Cooper, president of the RFA, supports a strategy that would limit access to the American market for certain foreign products, especially those made from raw materials like Chinese cooking oil.
According to Cooper, such an approach would encourage domestic production while balancing the United States’ trade relationships. While the RFA remains supportive of trade, it insists on fair measures to protect local producers from growing international competition.
A divided energy sector
Donald Trump’s proposed import tariffs underscore divisions within the American energy industry. The oil sector fears rising gasoline prices that could affect consumers, while the biofuels industry views these tariffs as an opportunity to strengthen its position in the local market. This divide reflects the uncertainty surrounding Trump’s proposed trade policy and the potential impact of this protectionist approach on the U.S. energy sector.
