Commodity markets are pricing in increased odds of US President Donald Trump's sanctions against Canadian imports including raw materials like oil, according to Goldman Sachs Group Inc. Analysts Samantha Dart and Daan Struyven indicate an 85% probability of a 10% tariff based on regional pricing differences for commodities including crude, copper, and aluminum. Higher eventual tariffs are associated with lower probabilities.
Amidst Trump's efforts to transform global trade, raw materials markets anticipate disruption. The US administration has proposed various approaches, including tariffs against neighboring countries and China, as well as commodity-specific sectoral levies. A universal tariff has also been discussed. Trump has threatened to implement Canadian and Mexican levies this weekend, though he has suggested that oil may be excluded.
Analysts highlight that Canadian oil tariffs could lead to unpopular, albeit temporary, gasoline price increases in the US Midwest, as Midwest refiners rely on Canadian crude shipments.