President Donald Trump’s will-he-or-won’t-he tariff drama is fraying nerves across the energy industry — even after Mexico and Canada persuaded him to hit the pause button today. His threats to impose steep levies on those countries plus China — the three major suppliers to the U.S. energy industry — have prompted fears that the price of everything from solar power to gasoline will skyrocket, whenever the trade penalties kick in. A 10 percent increase in tariffs on Chinese goods is still expected to take effect Tuesday, barring any last-minute reprieves such as the ones Trump granted earlier today to Mexico and to Canada. The long-threatened tariffs — which Trump officially announced over the weekend — would have also imposed a 10 percent levy on Canadian oil, natural gas, coal, uranium and other energy resources. Mexican imports, and other goods from Canada, would have been subject to a 25 percent levy. Trump has cited various rationales for his tariff threats, from stemming the flow of fentanyl and immigrants from Canada and Mexico to boosting domestic production of goods (and pressuring Canada to join the U.S. as its 51st state). But all the saber-rattling has worried the oil and gas industry. The American Petroleum Institute urged the Trump administration to fully exempt its products to “protect energy affordability for consumers.” While the U.S. is the world’s largest oil producer, a significant number of its refineries still rely on imported crude — and the vast majority of that fuel comes from our North American neighbors. In 2023, Canada provided about 60 percent of U.S. crude imports, while Mexico supplied 11 percent, writes Carlos Anchondo. The country’s reliance on Canadian oil is unlikely to change, meaning the cost spike could be passed onto consumers, boosting gasoline prices. The tariffs, whenever they take effect for specific countries, could also hike prices for the solar, battery, wind and electric vehicle industries, writes Benjamin Storrow. In recent years, global trade has helped drive down clean energy costs. Between 2009 and 2024, the average lifetime cost of utility-scale battery storage fell 83 percent. Over the same period, onshore wind costs dropped 65 percent. Canada, China and Mexico are all major producers of key electric grid components, such as transformers and switchgears, which the nation needs in order to update energy infrastructure to accommodate more solar and wind power. Canada and Mexico also supply the U.S. with much of its steel, which is a critical component for wind turbines. Mexico is an emerging electric vehicle production center, while Canada supplies roughly half of the refined nickel the country needs to build EV batteries. And China, of course, is responsible for building roughly three-quarters of the world’s lithium-ion batteries.
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