CAN-USA Tariff Strife (split from various pol threads)

[The Bread Guy]

... PP stating that these tariff threats are unjustified and that as PM he would retaliate if needed

But not committing to join in a "Team Canada" approach with current management (16:35 into this video of the newser)

 

[Jarnhamar]

I wonder if Canada will give Trump a 'Just watch us' themed response to his threats of tariffs or we'll scramble to appease him.

 

[The Bread Guy]

I wonder if Canada will give Trump a 'Just watch us' themed response to his threats of tariffs or we'll scramble to appease him.

Strategically targeted counter tariffs, for one, might send a message, but I wish I could be confident about execution.

And I also can’t tell how much better the other guy would be responding to unpredictable stuff from our big neighbour to the south. He’ll only do better than current management (low bar that), but curve balls can sometimes throw even good players.

 

[rmc_wannabe]

There's cognitive dissonance, then there's whatever the hell this is...

 

[Good2Golf]

The tariffs are a bargaining threat. I am among those who will look for some political deals to be made in areas not necessarily related to trade (mostly in the realm of improving US and collective security) in exchange for dropping tariffs. Those are kinds of costs which will truly be borne by foreigners.

This. Is. Precisely. Why. The. Tariffs.

 

[dimsum]

Exclusive: Trump plans no exemption for oil imports under new tariff plan, sources say​

https://www.reuters.com/business/en...nada-under-trade-plan-sources-say-2024-11-26/

Sorry, AB…

 

[dimsum]

Mexico responds:

Mexico president vows to retaliate with own tariffs against Trump’s tax threat

Claudia Sheinbaum rebukes Trump and says his plan would do nothing to stem flow of migrants or drugs bound for US

www.theguardian.com

 

[brihard]

Exclusive: Trump plans no exemption for oil imports under new tariff plan, sources say​

https://www.reuters.com/business/en...nada-under-trade-plan-sources-say-2024-11-26/

Sorry, AB…

Oof. That’s gonna suck. He’s going old school mercantile. I know the tariff talk is as much policy leverage as anything, but he’s pitching stuff so out there that he’s gonna get called on it.

A spike in the cost of import consumer goods probably won’t play well for the midterms, which typically disadvantage the incumbent president as is.

 

[The Bread Guy]

... A spike in the cost of import consumer goods probably won’t play well for the midterms, which typically disadvantage the incumbent president as is.

But hey, it'll encourage more domestic production once POTUS47 gets in, right? Silver lining to tariffs & all that.

 

[Remius]

But hey, it'll encourage more domestic production once POTUS47 gets in, right? Silver lining to tariffs & all that.

tariffs on everything.

Low unemployment rate so salaries may rise as companies try to produce more interbally

Deport the workers you could employ for said jobs.

Bail out certain to appease them

Inflation rises and debt goes to record highs.

But that’ll show ‘em.

 

[dimsum]

tariffs on everything.

Low unemployment rate so salaries may rise as companies try to produce more interbally

Deport the workers you could employ for said jobs.

Bail out certain to appease them

Inflation rises and debt goes to record highs.

But that’ll show ‘em.

Tesla has a ton of Mexican-made parts.

Anyone want to take bets on whether they will be charged the 25% tariff?

 

[TangoTwoBravo]

I avoid politics threads as a rule, but here I am. Its also pointless to discuss, but here I am.

Its been over 30 years since my Economics and Political Science classes, but tariffs were generally seen as a bad idea. Some 2nd World countries (South America) tried tariffs as part of ISI (Import Substitution Industrialization) in the 60s to grow domestic industries, but all it did was push inflation. Tariffs are generally imposed as an effort to protect domestic industries against "unfair competition." To me, unfair competition is a bit of a non-sequitur. You export things in which you have a comparative advantage and import those in which you do not.

I can kind-of see imposing tariffs as a rational response to another country subsidizing their product that is being exported to you and outpricing your domestic producers. So you impose the tariff on subsidized imports to "level the playing field." Still just leads to inflation.

The talk about Fentanyl and the "open border" being linked to the tariffs shows a fascinating disconnect between problem and solution. It almost more of an economic sanction. You threaten to impose a tariff to convince a trading partner to remove a tariff of their own.

Perhaps this is all 4D chess and the threat is just throwing the cat amongst the pigeons to gain an advantage in some forthcoming real discussions about trade and the border.

Or not.

 

[Colin Parkinson]

Better to go to the Congress and Senate members who represent people/industries in the US who will be effected by the Tariffs and grow internal dissent for them. Example here is that 40% of the current Kinder Morgan pipeline feedstock gets diverted down to Cherry Point in the US, they don't have another option for feed stock, so their product costs must go up 25% and be passed onto their US customers. The downside for us is they produce refined product to supplement our lack of refining for the lower mainland and aviation fuel, which is going to push prices up.

 

[Kirkhill]

Better to go to the Congress and Senate members who represent people/industries in the US who will be effected by the Tariffs and grow internal dissent for them. Example here is that 40% of the current Kinder Morgan pipeline feedstock gets diverted down to Cherry Point in the US, they don't have another option for feed stock, so their product costs must go up 25% and be passed onto their US customers. The downside for us is they produce refined product to supplement our lack of refining for the lower mainland and aviation fuel, which is going to push prices up.

In 2022, total annual U.S. natural gas exports were 6.90 trillion cubic feet (Tcf)—the highest on record. The United States has been an annual net exporter of natural gas since 2016.

In 2022, total annual U.S. natural gas imports were about 3.02 Tcf (8.28 Bcf/d), which was about 8% more than in 2021 and the highest volume since 2017. Some of this imported natural gas may have been exported.

The US exports more natural gas than it imports. Conclusion: It doesn't need the imports. It benefits from a lower cost supply of raw materials from its captive supplier. It can buy Canadian Natural Gas cheaper than it can produce it itself. Either way it can still turn a profit by liquefying the gas and selling it.

The US makes a business case for LNG exports and longer pipelines than Canada builds.

...

WRT oil/bitumen - yes US refineries are set up to take Alberta oil. But that can change. Especially if industry thinks that US oil policy is going to become stable.

...

With that 25% hurdle at the border the business case for east west pipelines and LNG terminals has just improved markedly.

In the meantime Trump will be looking for offsets if we want that barrier reduced.

As I noted - 25% of our exports to the US is 155 BCAD.
2% of our GDP is 60 BCAD.
Bumping our Defence Budget from 1% of GDP (current) to 3% of GDP (NATO Target Revised) would, I believe, buy us a 60 BCAD reprieve.
That 60 BCAD reprieve would reduce the Tariff burden from 155 BCAD to 95 BCAD.
The Tariff rate would reduce from 25% to 15%.

And a lot of the 2% could be found in the internal economy and need not impact the balance of trade.

Canadian people. Canadian buildings. Canadian vehicles. Canadian POL and Rations. Canadian Clothes. Canadian Guns and Ammo. Canadian sensors. -

Reallocation of Canadian resources. No out of country expenses necessary.

 

[Colin Parkinson]

How much of that LNG they export was sourced from Canada? Most of our NG goes South, that will change as LNGCanada goes on online and the US is forced to pay international price for our NG thereafter.

 

[The Bread Guy]

Most of our NG goes South, that will change as LNGCanada goes on online and the US is forced to pay international price for our NG thereafter.

Not to mention any revenues Canada could pull in with its own tariffs, should someone decide to impose same, no?

 

[TangoTwoBravo]

The US exports more natural gas than it imports. Conclusion: It doesn't need the imports. It benefits from a lower cost supply of raw materials from its captive supplier. It can buy Canadian Natural Gas cheaper than it can produce it itself. Either way it can still turn a profit by liquefying the gas and selling it.

The US makes a business case for LNG exports and longer pipelines than Canada builds.

...

WRT oil/bitumen - yes US refineries are set up to take Alberta oil. But that can change. Especially if industry thinks that US oil policy is going to become stable.

...

With that 25% hurdle at the border the business case for east west pipelines and LNG terminals has just improved markedly.

In the meantime Trump will be looking for offsets if we want that barrier reduced.

As I noted - 25% of our exports to the US is 155 BCAD.
2% of our GDP is 60 BCAD.
Bumping our Defence Budget from 1% of GDP (current) to 3% of GDP (NATO Target Revised) would, I believe, buy us a 60 BCAD reprieve.
That 60 BCAD reprieve would reduce the Tariff burden from 155 BCAD to 95 BCAD.
The Tariff rate would reduce from 25% to 15%.

And a lot of the 2% could be found in the internal economy and need not impact the balance of trade.

Canadian people. Canadian buildings. Canadian vehicles. Canadian POL and Rations. Canadian Clothes. Canadian Guns and Ammo. Canadian sensors. -

Reallocation of Canadian resources. No out of country expenses necessary.

Most of our oil exports are from Alberta to the US mid-west. Where they don't have oil. The pipeline infrastructure exists and it makes economic sense for all parties. Our Atlantic provinces import oil because it makes more sense that shipping it from Alberta.

Could long-term 25% tariffs change that? Perhaps. Certainly won't be easy (or quick) for any of the parties and it won't make sense either.

 

[Kirkhill]

In 2022, the United States exported natural gas to 46 countries. Previously, the United States exported relatively small volumes of natural gas, mostly by pipeline to Mexico and Canada. However, since the United States first began exporting LNG from the Lower 48 states in 2016, continued growth in LNG export capacity resulted in increased LNG exports. LNG exports increased substantially each year from 2016 through 2022. LNG exports exceeded pipeline natural gas exports for the second consecutive year in 2022. About 44% of total U.S. natural gas exports in 2022 were by pipeline, and about 68% of those exports went to Mexico and 32% went to Canada.

Natural gas imports peaked in 2007​

Total U.S. annual natural gas imports in 2007 reached about 4.61 Tcf (12.62 billion cubic feet per day [Bcf/d]) and have generally declined each year since then. In 2022, total annual U.S. natural gas imports were about 3.02 Tcf (8.28 Bcf/d), which was about 8% more than in 2021 and the highest volume since 2017. Some of this imported natural gas may have been exported.

Most of U.S. natural gas imports are from Canada​

In 2022, about 99% of U.S. total annual natural gas imports were from Canada and nearly all by pipeline. A small amount of CNG —0.01% of total natural gas imports—was tranported by truck from Canada. About 1% of total U.S. natural gas imports was LNG; 99% was from Trinidad and Tobago and the remainder was from Canada. U.S. natural gas imports are generally highest in winter when imports help meet increases in natural gas demand for heating.

Increases in U.S. natural gas production have helped to increase exports and reduce imports​

U.S. natural gas production exceeded domestic consumption in 2017 through 2022. This surplus contributed to increased exports and to the United States becoming a natural gas net exporter from 2017 through 2022. Increases in production have helped to reduce the need for imports in recent years. Imports by pipeline from Canada and LNG imports at the LNG terminal in Everett, Massachusetts, are important sources of U.S. natural gas supply during the winter months.

Natural gas imports and exports - U.S. Energy Information Administration (EIA)

Sources of U.S. natural gas imports and destinations of U.S. natural gas exports, and import and export volumes by pipelines and trucks and as LNG.

www.eia.gov

...

The US seems to be able to adjust to changing market conditions. And they manage that without taking decades to study and implement.

...

US Exports 6.9 Tcf
US Imports 3.0 Tcf

43% of US Exports are sourced from Imports.

99% of US Imports are from Canada by pipeline.

Ergo

43% of US Exports are of Canadian Natural Gas.

3.0 Tcf equates to 3,212,377,056 GJ

Conversion Tool

Last month Gas was selling for $0.54 / GJ
This month the same Gas is selling for $2.50 / GJ
Futures are in the $2 to $3 / GJ

3 Tcf costs somewhere about $2.50 / GJ or about

8 BCAD per year.

They then sell that to Europe

As of November 25, 2024, the price of natural gas in Europe was $14.22 per megawatt hour (MWh) at the Dutch TTF hub. This is equivalent to $14.97 per million British thermal units (mmBtu).

1 MWh is 3.6 GJ

Price in Europe is 14.22 USD/MWh or 3.95 USD per GJ
1 USD is 1.4 CAD
Price in Europe is 5.53 CAD per GJ

The 3 Tcf of Alberta Gas that the Yanks are buying for 8 BCAD per year they are selling in Europe for 17.7 BCAD

Margin of 100% - Minus costs of liquefying and transport.

 

[TangoTwoBravo]

Natural gas imports and exports - U.S. Energy Information Administration (EIA)

Sources of U.S. natural gas imports and destinations of U.S. natural gas exports, and import and export volumes by pipelines and trucks and as LNG.

www.eia.gov

...

The US seems to be able to adjust to changing market conditions. And they manage that without taking decades to study and implement.

...

US Exports 6.9 Tcf
US Imports 3.0 Tcf

43% of US Exports are sourced from Imports.

99% of US Imports are from Canada by pipeline.

Ergo

43% of US Exports are of Canadian Natural Gas.

3.0 Tcf equates to 3,212,377,056 GJ

Conversion Tool

Last month Gas was selling for $0.54 / GJ
This month the same Gas is selling for $2.50 / GJ
Futures are in the $2 to $3 / GJ

3 Tcf costs somewhere about $2.50 / GJ or about

8 BCAD per year.

They then sell that to Europe



1 MWh is 3.6 GJ

Price in Europe is 14.22 USD/MWh or 3.95 USD per GJ
1 USD is 1.4 CAD
Price in Europe is 5.53 CAD per GJ

The 3 Tcf of Alberta Gas that the Yanks are buying for 8 BCAD per year they are selling in Europe for 17.7 BCAD

Margin of 100% - Minus costs of liquefying and transport.

I am not an economist, but I have read that the bulk of Canadian oil that is imported by the US in used in the MidWest for their domestic consumption there. The oil imports do not go into a central oil tank from which exports are emailed around the world. US oil reserves are primarily in the vicinity of the Gulf of Mexico and Alaska. Like Canada, the US is a big country and transportation costs are real.

It costs money to ship oil around. It makes economic sense for the US midwest to import oil from Canada.

 

[Kirkhill]

The United States became a total petroleum net exporter in 2020​

In 2020, the United States became a net exporter of petroleum for the first time since at least 1949.1 In 2022, total petroleum exports were about 9.52 million barrels per day (b/d) and total petroleum imports were about 8.33 million b/d, making the United States an annual net total petroleum exporter for the third year in a row. Total petroleum net exports were about 1.19 million b/d in 2022. Also in 2022, the United States produced2 about 20.08 million b/d of petroleum and consumed3 about 20.01 million b/d. Although U.S. annual total petroleum exports were greater than total petroleum imports in 2020, 2021, and 2022, the United States still imported some crude oil and petroleum products from other countries to help to supply domestic demand for petroleum and to supply international markets.

The United States remained a net crude oil importer in 2022, importing about 6.28 million b/d of crude oil and exporting about 3.58 million b/d. Some of the crude oil that the U.S. imports is refined by U.S. refineries into petroleum products—such as gasoline, heating oil, diesel fuel, and jet fuel—that the U.S. later exports. Also, some of imported petroleum may be stored and later exported.

Petroleum imports from Canada have increased significantly since the 1990s, and Canada is now the largest single source of U.S. total petroleum and crude oil imports. In 2022, Canada was the source of 52% of U.S. gross total petroleum imports and 60% of gross crude oil imports.

The top five sources of U.S. total petroleum (including crude oil) imports by percentage share of total petroleum imports in 2022 were:

• Canada 52%
• Mexico 10%
• Saudi Arabia 7%
• Iraq 4%
• Colombia 3%

The top five sources of U.S. crude oil imports by percentage share of U.S. total crude oil imports in 2022 were:

• Canada 60%
• Mexico 10%
• Saudi Arabia 7%
• Iraq 4%
• Colombia 4%

Oil imports and exports - U.S. Energy Information Administration (EIA)

U.S. crude oil imports sources including OPEC and Persian Gulf, and top five source countries of U.S. oil imports and destinations of U.S. crude oil exports.

www.eia.gov

The US also makes money from selling oil and petroleum products overseas. 50 to 60% of that feedstock comes from Alberta.

West Texas Intermediate sells for $75 USD / Bbl
West Canadian Select sells for $55 USD / Bbl or a $20 USD / Bbl discount. That discount can vary on a weekly basis between $10 and $30 USD / Bbl.

25% of $55 is about $15 or mid range of the usual vagaries of the market.

That may explain why the industry can afford to take a wait and see position for a while.

Lots of moving pieces.

January Round-Up: Record output, record exports and a new speed bump for TMX | Oil Sands Magazine

OIL PRICES KICK-OFF THE YEAR WITH A SMALL GAIN After a soft ending to 2023, oil prices began the new year on a positive note. Averaged over the month of January, the West Texas (WTI) benchmark and synthetic crude (SCO) prices both gained about 2.5% last month. The differential on synthetic crude r

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