The market anxiety ahead of Donald Trump’s self-imposed Feb. 1 deadline for a first round of tariffs focused on oil and gas after the president appeared to acknowledge Thursday there could be issues with the energy staples in his overall plans.
On Friday, Reuters reported that Trump is weighing a delay on actual implementation of tariffs by a month, to March 1, and that exceptions would be possible but “few and far between.”
Read more: The latest news and updates as Trump’s tariff deadline approaches
But even that left questions surrounding how Trump will approach oil, as petroleum is Canada’s biggest export to the US.
Oil markets reacted to the news Friday and injected yet another question mark the an array of mixed signals leading up to tariffs.
Trump on Thursday first told reporters that “oil has nothing to do with it” but then hedged a few minutes later when he said “we may or may not” include oil in the tariffs and that a determination had yet to be made.
In part “it depends on what the price is,” he added.
The comments came after weeks where Trump has often focused on Canadian tariffs even as the economic effects of a standoff with America’s largest trading partner — and key provider of oil — are just being sorted out.
President Donald Trump in the Oval Office. (Kent Nishimura for The Washington Post via Getty Images) · The Washington Post via Getty Images
This is a “sign that the message is getting through to him,” Josh Zive, a tariff expert at Houston energy law firm Bracewell, said in an interview Friday.
“There’s a real tension point between the tariff policy priorities of this administration and the energy policy priorities of this administration,” Zive added, noting Trump “has got to find a way to solve that tension.”
Indeed, the inclusion of oil would be no small detail. Canada exported over $160 billion worth of crude and refined petroleum in 2022 and US firms made up the lion’s share of recipients. All told, Canada ships about 4 million barrels a day to the United States.
Oil markets were clearly paying attention Friday. West Texas Intermediate fell amid the uncertainty to trade just below $72 a barrel at one point. The effect was also seen in Canadian energy stocks, but with mixed results: For one, Phillips 66 (PSX) fell on the open Friday but then recovered some of the gains.
Trump also claimed Thursday that “we have more [oil] than anybody,” but many observers disagreed Friday, noting that a sudden disruption in oil could be destabilizing for the US as well as Canada.
“I think it’s just starting to hit because we don’t have all the oil we need,” noted Fernando Valle, Hedgeye energy analyst, in a Yahoo Finance interview on Friday.
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