Oil Holds Drop as Trump’s Tariff Threats Raise Trade War Fears

(Bloomberg) -- Oil held losses as President Donald Trump threatened a tariff on China, raising concerns over trade wars on several fronts after he said hefty levies on Canada and Mexico were being considered.

Brent traded near $79 a barrel following a run of declines since Thursday, while West Texas Intermediate was below $76. Trump said he was considering a 10% tariff on China in retaliation for the flow of fentanyl from the country. Canada has started sending a flood of crude to the US to beat potential levies.

Trump’s first day in office began with sweeping executive orders, including an overhaul of US energy policy and the threat of tariffs on Canada and Mexico of as much as 25%. Both countries are major exporters of goods to the US, including crude which is processed in American refineries.

Canadian suppliers are trying to “push as much volume out of the market as possible” before the tariffs, according to Rystad Energy. Levies, which Trump said could start from Feb. 1, would result in higher gasoline costs for American consumers, Goldman Sachs Group Inc. warned last year.

Crude still remains higher so far this year, helped by broad US sanctions on Russia which have upended physical oil and tanker markets. Trump said he’s likely to impose more penalties on Moscow if President Vladimir Putin doesn’t come to the table to negotiate on Ukraine.

“The oil market’s attention is slowly turning away from Russian sanction risks to the very real risk of an escalation in trade tensions,” said Warren Patterson, head of commodities strategy for ING Groep NV in Singapore. The threat of tariffs also supports the US dollar, he added.

©2025 Bloomberg L.P.