Consumers should expect gas prices to increase as a result of President Donald Trump’s border tariffs on Canada, but it may not be as drastic as people feared.
Trump’s 25% levy on all goods from Canada, except for energy products, including oil and natural gas, which face a 10% tariff, was set to go into effect Tuesday. Canadian Prime Minister Justin Trudeau revealed Monday afternoon via X that the tariffs would be paused for at least 30 days after the Canadian government agreed to implement a $1.3 billion plan to stop the flow of fentanyl across the border.
Trump announced the border tariffs over the weekend, initially targeting all goods from Mexico and Canada, plus an additional 10% tariff on China. Trump has also delayed the Mexican tariffs by one month for further negotiations with Mexican President Claudia Sheinbaum, who agreed to send 10,000 soldiers to the U.S.-Mexico border to curb drug trafficking and illegal border crossings.
If the tariffs go into effect after one month, it will likely take several weeks to feel some of the effects, particularly on products such as unrefined oil. Consumers would be expected to see the costs of goods such as gasoline and diesel rise. However, the severity would depend on location.
Patrick De Haan, head of petroleum analysis at GasBuddy, told the Washington Examiner that as different regions of the U.S. import various types of products, when and how much prices increase will also likely differ.
Areas including the Great Lakes, Midwest, and the Rocky Mountains traditionally import Canadian crude oil that is later refined in the U.S. Meanwhile, New England primarily imports already refined products, such as propane, diesel, heating oil, and gasoline. As these products are refined before entering the U.S. and can get to the consumer faster, price increases would also likely be felt in that region first.
De Haan estimated that New Englanders will see a price jump of around $0.15 to $0.25 per gallon. Similar price increases may not hit refining areas, including the Midwest, for several weeks. People in those regions could also see a greater price disparity, with increases anywhere from $0.05 to $0.20 a gallon, he said.
As consumers brace for the high prices, De Haan warned that they will coincide with typical seasonal price increases expected in the first half of the year. In December 2024, GasBuddy estimated that gas prices would rise by more than $0.60 a gallon.
“We’re not going to see record-setting prices this year,” De Haan said, adding that “the normal seasonal rise could be slightly more noticeable this year if the tariffs move forward and are implemented for more than multiple weeks.”
For days, major players within the energy industry urged the Republican president to completely exclude energy products from the tariffs, given how much U.S. refineries rely on imports of Canadian oil and gas.
The U.S. has imported millions of barrels of crude oil from Canada on a daily basis for decades. Canada and Mexico combined supply more than 71% of U.S. crude imports, with Canada making up 60% alone. In July 2024, U.S. imports reached record levels, hitting 4.3 million barrels a day, according to the Energy Information Administration.
The American Petroleum Institute emphasized the importance of these imports one day before Trump announced the tariffs, saying the Canadian crude oil is “critical for transportation, agriculture, and American consumers.”
The U.S. Chamber of Commerce criticized the tariffs over the weekend, saying they are “unprecedented, won’t solve these problems, and will only raise prices for American families and upend supply chains.”
Local politicians in the Midwest have also taken aim at the tariffs and the effect they could have on families.
“Let’s call these tariffs what they are: Trump’s Taxes on Working Families,” Gov. JB Pritzker (D-IL) said in a Saturday statement. “If these tariffs remain in place, it will jack up the price of groceries and goods, make gas more expensive, and raise utility bills.”
While it remains unclear how long the 10% tariff could affect gas prices if it is implemented after the 30-day delay, some in the industry have indicated that it will not have dramatic long-term effects on the market. In a recent note obtained by Bloomberg, Goldman Sachs indicated gasoline price increases would be temporary.
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The Wall Street bank has not adjusted its oil price forecasts for this and next year, indicating that it expects limited damage.
As of Monday, the national average price for gas sat at $3.098, according to estimates calculated by AAA.
