Market anxiety ahead of Donald Trump’s self-imposed Feb. 1 deadline for a first round of tariffs focused Friday on oil and gas after the president appeared to acknowledge Thursday there could be issues with the energy staple in his overall plans.
His comments left a key unanswered question about how new duties would impact energy markets, with petroleum sitting as Canada’s biggest export to the US and a slow in those oil flows likely to destabilize both nations.
White House Press Secretary Karoline Leavitt declined to offer any additional detail Friday afternoon about the closely watched issue of exceptions but underlined that Trump is committed to “unleashing the might of our energy industry, which we know will eventually drive down inflation.”
She also flatly stated that “starting tomorrow, those tariffs will be in place” and denied a report that any delays could be in the offing.
Read more: The latest news and updates as Trump’s tariff deadline approaches
The focus on oil comes after Trump on Thursday told reporters that “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.
Trump often focused for weeks 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 about the president’s comments.
“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.
Story Continues