Goldman Sachs reported on Friday that overseas producers would lose $10 billion a year due to Trump’s 10% oil tariff, which is set to take effect in March. Beginning in March, President Donald Trump intends to implement a 10% tax on Canadian petroleum and a 25% tariff on Mexican crude, delaying his original proposal. Because there are few other consumers and little processing capacity overseas, Canadian and Latin American heavy crudes continue to be mostly dependent on U.S. refiners.

Goldman anticipates that the United States will continue to be the main market for heavy crude in spite of the levy. The bank emphasized that because of the low cost of refining in the United States, American refiners are the most competitive purchasers due to their superior processing capabilities. To counteract the impact of the levy, heavy crude from overseas suppliers may still enter the United States at reduced costs.

Price Adjustments and Trade Flow Shifts

According to Goldman, for Middle Eastern medium crude to become more appealing to Asian refiners, light oil prices would need to rise by 50 cents per barrel. The investment bank stated that to make U.S. refining operations more competitive, U.S. Gulf Coast refiners would continue to prioritize domestic light crude over imported medium grades.

Currently, pipelines carry 3.8 million barrels of crude oil per day (bpd) from Canada, the largest oil supplier to the United States. Prices will likely adjust to offset the impact of the tax, and these exports are anticipated to continue. Price reductions would also be applied to 1.2 million barrels per day of seaborne heavy crude oil imports from countries such as Mexico, Canada, and Venezuela, guaranteeing consistent flows into the United States despite the tax. Trump’s 10% oil tariff is expected to reshape trade flows, forcing suppliers to offer discounts to maintain market access.

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Financial Implications for Consumers and Refiners

According to Goldman Sachs, the government would generate $20 billion from the tariffs, while American consumers could have to pay $22 billion a year. By connecting supplies to upscale coastal markets, refiners and traders could profit by $12 billion by exploiting price differences between overseas heavy crude and discounted U.S. light crude.

The investment bank noted that to remain competitive in the U.S. market, Canadian producers would have to absorb a large portion of the tariff burden through price reductions because they are “captured sellers” with few other buyers.

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