Trump Tariffs Would Likely Drive Price Increases for Fuel Retailers

On March 4, 2025, the Trump administration announced that it was proceeding with the implementation of new tariffs on imports from Canada, Mexico, and China, including a 10% tariff on energy products from Canada. While these tariffs were largely postponed on March 6, uncertainty remains regarding U.S. trade policies and the possibility of future tariffs. This commentary explores the possible impacts of imposed tariffs on American fuel retailers:

-- In 2024, the U.S. imported more than 4 million barrels of crude oil per day from Canada, which was the United States' largest supplier and accounted for over 60% of the country's total crude oil imports.
-- We believe the added costs related to tariffs would ultimately largely be passed on to the consumers, resulting in higher fuel prices.
-- In our view, the issuers within our portfolio are generally well positioned to deal with tariff-related headwinds.

"Should these tariffs on energy products ultimately be implemented, they would likely result in higher gas and diesel prices at the pump. However, we expect the impact of higher prices on fuel volumes would be minor given the largely non-discretionary nature of fuel sales." said Reid Usher, Assistant Vice President, Corporate Ratings. "That said, the impact of higher fuel costs, coupled with rising costs related to overarching tariffs on the wide array of imported goods, would be expected to weigh on the American consumers' wallets, and could affect merchandise sales volumes for certain product categories."