Oil prices jump, defy Trump's trade tariffs

Oil prices jumped on Monday despite the real threat of a global trade war erupting after US President Donald Trump announced wide-ranging tariffs on U.S. imports,  this time targeting steel and aluminum. 

On Monday, Trump announced he will impose a 25 per cent import tax on all steel and aluminum entering his country, with Canada likely to be hardest hit. 

He also talked about reciprocal tariffs on all countries that tax imports from the U.S., although he did not give the specifics, "If they charge us, we charge them," Trump said. 

Brent crude for April delivery was up 1.8% to trade at $75.98 per barrel at 15.40 p.m ET while WTI crude for March delivery gained 2.0% to trade at  72.41.

It appears that Trump’s end-game is to keep the markets on their toes, but that strategy might not be working, this time around.

"It's tariff uncertainty which is the name of the game. This affects risk appetite in general and has spillover effects into oil," said Harry Tchilinguiran at Onyx Capital. "After last week's declines, some people may be buying into the dip."

Trump’s latest tariff threats come at a time when the trade balance between the U.S. and its biggest trading partner has been tilting against it.  

Canada’s energy exports to the United States surged in the latter part of 2024, helping the country record its biggest surplus with its main trading partner since 2022. 

Crude oil exports jumped amid a weakening Canadian dollar as well as traders stockpiling inventories ahead of Trump’s tariffs.

The trade surplus widened to C$11.3 billion in December, up from C$8.2 billion previously while crude exports to the U.S. jumped 11.8% in the final quarter. 

Nearly 76% of all exports by Canada went to the U.S. compared to 62% of all imports coming from the U.S. 

Last year, the value of Canada’s imports and exports with the U.S. surpassed the C$1 trillion mark for a third straight year.