During the first week of March, President Donald Trump implemented previously announced double-digit tariffs on certain products imported from Canada and Mexico. As consumers rushed to stock up on avocados and tomatoes, a less visible and yet significant consequence loomed: the impact tariffs could have on already surging energy costs .
Here’s why. We’ve all heard about the dramatic growth of domestic crude oil production in the last 15 years. And it’s true. But even with that record production, the U.S. still imports significant amounts of foreign crude, much of it from Canada and Mexico.
Last year, the U.S. Energy Information Administration issued a report showing how crude-oil imports from Canada have not only increased for the last two decades but have come to make up a larger and larger share of all U.S. imports. Their share grew from 33% in 2013 to 60% in 2023.
One of the main reasons for that level of North American imports is the structure of our vast refinery system. U.S. refineries have long been calibrated to handle “heavier” products like those produced in Canada’s oil sands, especially given Canada’s status as one of our longest and largest trade partners.
Asking these refineries to change and process “lighter” U.S. crude oil could cost billions. And there is little incentive to make such an expensive overhaul for trade policies that could prove to be temporary. Instead, some major refiners have indicated that tariffs would cause them to reduce output.
Either way, consumers are harmed — by less availability of gasoline and other products or by paying for upgrades to the refining system.
The situation is likely to be even worse for the Midwest and New England, which both rely heavily on Canadian energy imports. In the Midwest , there are 25 refineries that are significant consumers of Canadian product and a network of pipelines that transport most Canadian imports.
Also known as PADD 2, the region currently receives about 2.5 million barrels per day of Canadian crude oil. Midwestern and Great Lakes states could see gasoline prices rising even more than the “normal” seasonal increase of 25 cents to 75 cents a gallon.
Besides imported oil, certain regions of the U.S. also import electricity from Canada. The U.S. and Canada have an interconnected power system, with connections ranging from New England to the West Coast. Now, however, the escalating trade war could impact this century-old arrangement. Ontario Premier Doug Ford recently declared , and then suspended, a hefty 25% surcharge on electricity exports to Michigan, Minnesota, and New York.
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As the back and forth continues, we do not know how long current tariffs may stay in place, whether they will grow or shrink, or whether there will be exemptions for energy. Regardless of the duration or level, there is no question that policy uncertainty and market instability are unhelpful for businesses and consumers.
President Trump clearly believes tariffs are an important tool for a variety of policy objectives. But as he deploys them, he should recognize the detrimental impacts they can have.
He and Vice President J.D. Vance campaigned on keeping energy prices low . Since taking office, their administration has taken numerous actions to unleash American energy and lower costs for all Americans. Imposing tariffs on our neighbors may very well lead to the opposite result, however.
Jeffrey Kupfer was acting deputy secretary of energy in President George W. Bush’s administration and is an adjunct professor of policy at Carnegie Mellon University’s Heinz College in Pittsburgh. He wrote this for the News Tribune.
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