Measurement and Testing
How Will Trump's Trade War Affect Oil?
Jun 18 2018 Read 823 Times
From accusations of sexual misconduct to clandestine tax returns, Donald Trump has drummed up plenty of controversy during his presidency. Now, experts are warning that Trump's looming trade war could have serious consequences for the global oil market.
Several weeks ago, Trump not only ramped up trade penalties on China but also moved forward with tariffs on Mexico and the European Union. Canada, one of America's closest trade partners and allies was also on the hit list, with the Trump administration slamming a 25% levy on steel and a 10% tax on aluminium.
Canada set to strike back
Unsurprisingly, all three countries were quick to announce retaliatory action, with Canadian Prime Minister Justin Trudeau asserting, “It would be with regret but it would be with absolute certainty and firmness that we move forward with retaliatory measures on July 1st, applying equivalent tariffs to the ones that the Americans have unjustly applied to us.”
Trudeau didn't mince his words, assuring Trump that Canadians won't stand for economic bullying. “I have made it very clear to the president that it is not something we relish doing, but it is something that we absolutely will do, because Canadians: we’re polite, we’re reasonable, but we also will not be pushed around,” he says.
Shaking up the complex supply chain
With the trade war escalating, IEA analysts are concerned there could be a weighty fallout for the oil market. A slump in global trade could seriously affect demand, especially when it comes to fuel used in the ground transport and maritime sectors.
The American Petroleum Institute (API) agrees, with President and CEO Jack Gerard warning that the international tariffs will unsettle the complex supply chain that fuels the US oil and gas industry. He maintains this will compromise both ongoing and future energy projects and in turn, weaken national security.
With oil prices only just starting to stabilise in the wake of efforts from OPEC, the economic unrest couldn't come at a more inconvenient time. Of course, a drop in oil prices would be good news for Trump, with the President recently taking to Twitter to complain about oil prices.
"Oil prices are too high, OPEC is at it again. Not good!" he recently posted online.
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