Here’s how much gas could cost you if Trump’s threatened tariffs go through

Republican presidential nominee Donald Trump’s promised tariff on imports could hit U.S. voters where it hurts — their gas tanks.

Trump has called for imposing tariffs of up to 20 percent on all imported goods should he be elected. That would likely affect at least half, if not all, of the 8 million barrels of crude oil that the United States imports, market analysts said, in what could become an especially politically explosive example of his tariffs’ impact on consumers’ wallets. Such a move could also blow up a trade treaty with the nation’s No. 1 supplier of imported oil: Canada.

Rising U.S. oil production has enabled the country to become a net exporter of crude and petroleum products since late 2019. But many U.S. refineries are built to use imported crude oil grades not readily available domestically. Those companies would either have to pay the import tax or spend hundreds of millions of dollars to change their equipment to use the type of oil produced in the United States, analysts said.

Either way, the costs would be passed along to drivers in the form of higher gasoline prices, according to analysts, including those at the Montreal-based investment research firm BCA Research.

A 10 percent tariff — the minimum level Trump has floated — would raise the average retail gasoline price by 5 percent, said BCA Research’s chief strategist for commodities and energy research, Roukaya Ibrahim, and its chief strategist for geopolitics and U.S. politics Matt Gertken, in an email to POLITICO. At current prices, that would hike the current national average from $3.35 a gallon to $3.50.

Trump could lessen the blow to consumers by exempting some or all of the oil imports from his promised tariffs, but a campaign spokesperson did not answer when asked whether the former president would offer any such exemptions. Trump has asserted — incorrectly — that foreign governments, not consumers in the U.S., bear the costs of tariffs.

Spokespeople for Democratic presidential nominee Vice President Kamala Harris did not reply to questions about the potential impact of Trump’s tariff on oil prices. But Harris has broadly criticized Trump’s tariff proposals, warning during her Democratic convention speech last week that they would amount to “a national sales tax.” Trump, in turn, has attacked Harris’ proposals to combat corporate price-gouging, likening them to “SOVIET Style Price Controls.”

The BCA analysts said the tariff’s impact on fuel prices would give Trump strong reason to exempt energy commodities or quickly remove the tariff from them once applied.

“There would be an incentive for Trump to make large exemptions to prevent too sharp of an increase in prices, and also to negotiate solutions bilaterally with countries very quickly,” the analysts said via email.

Trump has made new tariffs a regular feature of his stump speech, threatening levels between 10 and 20 percent for most imports and 60 percent for products made in China.

Experts and economists warn those tariffs would drive up consumer costs and almost certainly spark a trade war that could hurt U.S. exporters.

The nonpartisan Peterson Institute for International Economics said recently that Trump’s tariffs would cost the average American household more than $2,600 a year as companies passed along the cost of the extra tax on the goods they import, leading to a “massive shifting of the tax burden from richer taxpayers toward lower-income Americans.”

The Tax Foundation, a nonpartisan tax policy analyst, said in its own report that Trump’s tariffs would reduce economic growth over the long run by 0.8 percent and counter any growth spurred from the tax cuts he’s also proposed.

Trump and other tariff supporters say the tax on imports helps domestic manufacturers compete and expand their businesses. But the U.S. is already an oil-producing powerhouse, pumping out record amounts of crude — so even if consumers pay more for gasoline, the companies making the fuel would be unlikely to boost production. And for technical reasons, some U.S. oil refineries still need to import types of oil that are more easily produced in Canada and elsewhere.

Despite United States’ teeming oil production, the country still imports roughly 6 million barrels a day of crude oil and 600,000 barrels a day of other chemicals used by refineries to make gasoline, diesel, jet fuel and other transportation fuels.

When asked whether Trump would exempt oil from his proposed tariff or, if not, take steps to offset the added cost to drivers, Trump campaign spokesperson Karoline Leavitt responded: “It is one of President Trump’s top priorities to bring down the cost of energy that has skyrocketed under the Harris-Biden Administration. President Trump will end the Harris-Biden Administration’s burdensome regulations on the energy industry to make America a net-exporter of energy again which will drive down costs and make gasoline cheap again for working American families.”

However, the United States is already a net exporter of crude oil and other petroleum products like gasoline and propane.

Stripping out the processed products, the United States still imports about 2 million barrels a day of crude oil more than it exports, though that number has been falling significantly since peaking at more than 10 million barrels a day in 2005.

Gasoline prices are one of the most direct factors in how voters feel about the economy because many people see how prices are moving every day, analysts have said. That was evident when the Russian invasion of Ukraine and lingering supply disruptions stemming from the pandemic caused U.S. prices to spike to an all-time high above $5 a gallon two years ago, stirring anger among U.S. drivers and causing political headaches for the Biden administration.

The American Fuel and Petrochemical Manufacturers, a trade association representing gasoline makers, declined to comment on Trump’s tariff proposals. Major refining companies Marathon Petroleum and Exxon Mobil also declined to comment. Valero Energy, one of the largest fuel producers in the country, did not respond to questions.

Trump would need to exempt imported oil and fuel from the tariffs if he doesn’t want to face a public backlash, said Glenn Schwartz, energy policy director at consulting agency Rapidan Energy.

“Obviously, if there was a 20 percent increase in either crude or [fuel] products directly, it would be pushed on to consumers in the form of a price increase,” Schwartz said. How high that increase would go would depend on how long the tariffs would be in place and other factors, he added.

“Politically, we would expect Trump to make efforts to see if he could carve out exceptions for crude and [fuel] products,” Schwartz said. “He is very aware of the political dynamics and how difficult it is for presidents of any party when gas prices increase. That’s political poison.”

Tariffs could have the biggest impact on oil brought in from Canada, home to just over half the of 8.5 million barrels a day of oil and refined products imported into the United States last year.

Treaties between the two countries, including the United States-Mexico-Canada Agreement free trade pact that Trump signed in 2020, should shield Canadian crude from tariffs and other fees, said Mike Fernandez, vice president for communications at Canadian pipeline company Enbridge.

One agreement between the two nations, the 1977 Transit Pipeline Treaty, “essentially says not only can you not interrupt the flow of hydrocarbons between the two countries … but also no tax can be applied,” Fernandez said in an interview. A tariff could still affect the steel or other manufactured parts Enbridge might import to build pipelines or renewable energy infrastructure in the United States, he added.

But analysts also noted that international agreements are not always permanent — Trump himself during his time in the White House negotiated the replacement of the North American Free Trade Agreement with the U.S.-Mexico-Canada Agreement and left the non-binding Paris climate accord.

“Depending on how the tariff language and justification is written, they certainly could affect Canada,” said Frank Verrastro, senior adviser with the Energy Security and Climate Change Program at the Center for Strategic and International Studies.

Even excluding petroleum from tariffs, experts say any general tax on imports would affect energy prices, given the extra costs it would add to steel and other materials companies purchase from overseas. The American Petroleum Institute and other energy trade associations have criticized the idea, saying it would raise the cost of doing business.

Oil industry lobbyists “fanned out” at the Republican and Democratic nominating conventions to argue against protectionist trade policies that could lead to retaliatory tariffs on U.S. oil and gas exports, said one industry attorney granted anonymity because he wasn’t authorized to speak to the media.

But that effort looks doomed to fail, said the person, noting that Trump has picked another fierce free-trade critic — Ohio Republican Sen. JD Vance — as his running mate.

“I think it will be a heavy lift to convince Trump that tariffs are a bad idea,” this person said by email. “The selection of Sen. Vance as the Vice Presidential candidate only intensified the industry’s fears that the battle against the imposition of U.S. tariffs will be a long and difficult one.”

Here’s how much gas could cost you if Trump’s threatened tariffs go through

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