Trump’s tariffs on Canada would raise regional commodity prices
A blanket 25% tariff on Canadian imports to the US could have a significant impact on commodity prices, squeeze profit margins of Canadian exporters and raise prices for US end-users. Canadian production and investment would also likely suffer although financial support mooted by government, if implemented, could soften the blow.
What you will learn:
- Crude oil: Weaker global and US demand would result in slightly lower global benchmarks for crude oil. The spread between Western Canada Select (WCS) and WTI crude oil prices would widen, as Canadian producers bear some of the burden of higher costs for US importers.
- Aluminium: Global primary aluminium prices would fall on softer global demand but higher Midwest premiums from tariffs would raise prices for US customers. The dominant share of the US market in Canadian exports suggests diverting volumes to alternative markets will be difficult.
- Steel: A large US domestic steel industry, and a lower dependence on Canadian imports would result in a smaller rise above baseline for US steel prices.
- Lumber: Lumber prices are expected to rise, although a slower US housing recovery, burdened by higher prices, will limit the extent to which exporters will be able to pass on price increases.
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