Trump warns tariffs on Canada and Mexico are coming on Saturday

Donald Trump said his decision will be based on whether the price of oil charged by the two trading partners is fair, although the basis of his threatened tariffs pertains to stopping illegal immigration and the smuggling of chemicals used for fentanyl.

The risk of tariffs on Canadian and Mexican oil could undermine Trump's repeated pledge to lower overall inflation by reducing energy costs. Costs associated with tariffs could be passed along to consumers in the form of higher gasoline prices — an issue that Trump placed at the center of his Republican presidential campaign as he vowed to halve energy costs within one year.

“One year from Jan. 20, we will have your energy prices cut in half all over the country,” Trump said at a 2024 town hall in Pennsylvania.

AP VoteCast, an extensive survey of the electorate, found that 80% of voters identified gas prices as a concern. Trump won nearly 6 in 10 voters who said they worried about prices at the pump.

The United States imported almost 4.6 million barrels of oil daily from Canada in October and 563,000 barrels from Mexico, according to the Energy Information Administration. U.S. daily production during that month averaged nearly 13.5 million barrels a day.

Matthew Holmes, executive vice president and chief of public policy at the Canadian Chamber of Commerce, said Trump's tariffs would “tax America first” in the form of higher costs.

“This is a lose-lose,” Holmes said. "We will keep working with partners to show President Trump and Americans that this doesn’t make life any more affordable. It makes life more expensive and sends our integrated businesses scrambling.”

But Trump showed no concerns that import taxes on the United States' trading partners would have a negative impact on the US economy, despite the risk shown in many economic analyses of higher prices.

“We don’t need the products that they have," Trump said. "We have all the oil you need. We have all the trees you need, meaning the lumber.”

The president also said that China would pay tariffs for its exporting of the chemicals used to make fentanyl. He has previously stated a 10% tariff that would be on top of other import taxes charged on products from China.

Oil prices were trading at roughly $73 a barrel on Thursday afternoon. Prices spiked in June 2022 under President Joe Biden to more than $120 per barrel, a period that overlapped with overall inflation hitting a four-decade high that fueled a broader sense of public dissatisfaction with the Democratic administration.

Gas prices are averaging $3.12 a gallon across the United States, roughly the same price as a year ago, according to AAA.

Later on Thursday, Trump threatened more tariffs against countries looking at alternatives to the US dollar as a means of global exchange.

The president previously made the same threat in November against the so-called BRICS group, which includes Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran and the United Arab Emirates.

Russian President Vladimir Putin has suggested that sanctions against his country and others mean that nations need to develop a substitute for the dollar.

“We are going to require a commitment from these seemingly hostile Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty US Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful US Economy,” Trump posted on social media.