American drivers could soon see a noticeable jump in gas prices as a result of President Donald Trump’s latest trade policy targeting Canada.
The administration’s newly imposed 10% tariff on Canadian crude oil is expected to drive up the cost of gasoline across the United States, with some regions facing price increases of 15 to 20 cents per gallon.
For millions of Americans, fuel prices have long been a sensitive issue, influencing household budgets and the broader economy.
With Canada supplying nearly 60% of U.S. crude oil imports, the tariff has sparked concerns about rising costs at gas stations, particularly in states that are most dependent on Canadian energy.
How Much Will Gas Prices Increase?
Industry analysts predict that the average price of gasoline could increase by at least 15 cents per gallon, with certain regions experiencing even steeper hikes.
“The Great Lakes, Midwest, and Rocky Mountain regions are particularly vulnerable,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “Since these areas are heavily reliant on Canadian crude, drivers there could see prices jump by 20 cents per gallon or more.”
For context, the current national average for gasoline is around $3.50 per gallon. If prices rise by 15-20 cents, the average driver could be paying an additional $2 to $4 per tank, depending on vehicle size and fuel efficiency.
Why Is Canada’s Oil So Important?
The United States imports roughly 6.6 million barrels of oil per day, with Canada supplying more than half of that total.
American refiners, particularly in the Midwest, are heavily dependent on Canadian heavy crude, which is better suited for refining than the lighter crude produced domestically.
Although the U.S. is the world’s largest producer of oil, much of its own output consists of lighter crude oil, which many refineries are not optimized to process efficiently. As a result, replacing Canadian crude is neither quick nor cost-effective.
“This tariff could disrupt the supply chain and force refiners to source oil from other markets at a higher cost,” said an oil industry expert. “That increase in cost will ultimately be passed on to consumers at the pump.”
Who Will Be Hit the Hardest?
While all U.S. consumers are likely to feel the effects of the tariff in some way, those in the Midwest, the Great Lakes region, and the Rocky Mountains will be hit hardest.
These areas depend heavily on Canadian crude because their refineries are designed to process it efficiently. With the 10% tariff adding cost to every barrel imported, fuel prices in these regions are expected to rise the most.
For example:
- Chicago, Minneapolis, and Detroit – Cities in the Midwest could see 20-cent increases per gallon.
- Denver and Salt Lake City – The Rocky Mountain region could also experience above-average price hikes due to reliance on Canadian crude.
- New York and California – While less dependent on Canadian imports, these states could still see slight price increases due to broader market effects.
How This Tariff Could Impact Inflation
The effects of higher fuel prices extend beyond just the cost of filling up a gas tank. Since transportation and shipping costs are tied to fuel prices, Americans could soon be paying more for everyday goods, including food, clothing, and consumer products.
Economic analysts warn that higher gasoline prices could fuel inflation, making it more difficult for policymakers to stabilize the economy.
“When fuel prices rise, transportation costs increase, which raises the price of goods across the board,” said a senior economist. “This could add pressure to inflation just as policymakers are trying to keep costs under control.”
The U.S. economy has already been battling inflation concerns, and additional price hikes could lead to higher costs for businesses, lower consumer spending, and increased financial strain on households.
Are There Any Alternatives to Canadian Oil?
In response to the tariff, some energy analysts have suggested that the U.S. could try to source heavier crude oil from other nations, such as Mexico, Venezuela, or the Middle East. However, this is not an easy solution.
- Mexico’s oil production is limited, and it does not have enough capacity to fully replace Canada’s crude supply.
- Venezuelan crude could be an option, but U.S. relations with the Venezuelan government have been strained for years, and sanctions remain in place.
- Middle Eastern oil imports are more expensive due to higher shipping costs and geopolitical instability.
With limited options, U.S. refineries may continue using Canadian crude but pass the additional costs to consumers, leading to prolonged higher gas prices.
What Happens Next?
As the tariff takes effect, gasoline prices could rise quickly, especially in regions most dependent on Canadian imports.
The Biden administration, lawmakers, and industry leaders may look for ways to mitigate the impact, but short-term relief options are limited. Some possibilities include:
- Releasing oil from the Strategic Petroleum Reserve to stabilize prices.
- Negotiating trade exemptions or alternative deals with Canada.
- Encouraging domestic refineries to process more U.S. crude, though this would take time.
In the meantime, American consumers should prepare for higher fuel costs, with potential ripple effects across the economy.
Final Thoughts
Trump’s 10% tariff on Canadian crude oil is set to increase gas prices by up to 20 cents per gallon, with the Midwest and Great Lakes regions facing the steepest hikes.
With Canada supplying over half of U.S. crude oil imports, this policy change is likely to impact American drivers, increase transportation costs, and contribute to inflationary pressures.
As gas prices climb, consumers and businesses alike will need to adjust budgets accordingly, while policymakers weigh potential strategies to stabilize the market.
For now, filling up your tank may soon cost more than expected, making fuel efficiency and strategic refueling decisions more important than ever.
This article has been carefully fact-checked by our editorial team to ensure accuracy and eliminate any misleading information. We are committed to maintaining the highest standards of integrity in our content.
A senior at Yale-NUS College with interests in developmental and labour economics, as well as creative non-fiction and poetry. Currently, I’m studying as an Economics major and an Arts and Humanities minor (focusing on Creative Writing) with heavy involvement in the Singaporean journalism scene and involved in research on economic history and educational policy. I’m working as an author for SKC News, Yale-NUS’ student publication, as a writer for Wingspan, Yale-NUS’ alumni magazine, and as a tutor for the NUS Libraries Writer’s Centre. | Linkedin