Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Politics

Trump’s Tariffs Are a Warning

Don’t ignore what the president says he wants to do, no matter how unwise it seems.

Oil barrels.
Heatmap Illustration/Getty Images

On Saturday evening, President Donald Trump signed orders placing 25% tariffs on all goods imported from Canada and Mexico, and a lower, 10% tariff on Canadian oil, natural gas, uranium, and other energy sources.

Trump also imposed a 10% tariff on all goods imported from China.

The tariffs will go into effect on Tuesday, giving Trump — who revels in proposing tariffs but has shown some reluctance to impose them for real — another 48 hours to maneuver. But if the new tariffs do actually bite, then they will affect nearly half of America’s imports and reshape some of the world’s most important energy and trading relationships.

Every day, millions of barrels of oil and cubic feet of natural gas flow across the U.S., Canada, and Mexico borders. The three countries have developed an integrated and harmonized network of pipelines, storage tanks, and refineries that has helped turn the United States into the world’s No. 1 producer of oil and natural gas.

The tariffs will almost inevitably disrupt that relationship. They may also upset the millions of dollars’ worth of electricity that shuttles from Canada to the United States every day across their shared power grids.

The tariffs will prove economically painful, although just how damaging is hard to know in advance. They could shrink the United States’ GDP by 0.4%, while increasing taxes by $830 per household, according to an analysis by the Tax Foundation, a center-right think tank. Another estimate from the Budget Lab at Yale says that the tariffs could push up the personal consumption expenditures price index — the Fed’s chosen inflation gauge — by 0.75%, reducing the average household’s purchasing power by $1,200 over the course of a year.

Get the best of Heatmap in your inbox daily.

* indicates required
  • These costs could worsen as Mexico, Canada, and China raise their own tariffs or trade barriers in retaliation. Late on Saturday, Prime Minister Justin Trudeau announced that Canada would impose its own 25% tariffs on CA$155 billion of goods imported from the United States.

    The economic hit to the U.S. economy could also be much larger than estimated if some manufacturers respond to higher costs not by hiking prices, but rather by delaying or shutting down production.

    We’ve been reporting on the economic impact of these tariffs at Heatmap over the past week, documenting their potential impacts for oil refineries and the electricity grid. But now that the details are here, a few things stand out.

    First, the tariffs on China are qualitatively different from the tariffs on our North American neighbors — especially Canada.

    Chinese tariffs are not new. Trump engaged China in a trade war during his first term and ultimately reached a handshake agreement, although he has since said that China did not buy enough American agricultural products to keep up its end of the bargain. Some of the tariffs Trump placed on Chinese imports last time — including eye-watering levies on solar panels — remain in effect; the new 10% tariff will be added to those figures.

    What did not happen last time was a serious, out-and-out trade war with Canada and Mexico, America’s neighbors and biggest trading partners. Although Trump entertained the possibility of Mexican tariffs during the campaign, he did not propose tariffs on Canadian imports until after his November election.

    Second, the tariffs are quantitatively different, too. The president has not yet explained why he has placed higher tariffs on Canada and Mexico, who are our allies, than on China, which is our economic frenemy at best and our geostrategic adversary at worst. During the campaign, Trump sometimes proposed a “universal tariff” of 10% to 20% on all American imported goods, regardless of their country of origin. That proposed universal tariff — which was seen by some analysts as an extreme and unlikely proposal — was at a lower rate than what he is now levying on North American imports.

    Third, this trade war has apparently been concocted and planned much more haphazardly than the one during Trump’s first term. Last time, the U.S. was careful to exempt electronics — iPhones, laptops, Xboxes — from its levies, as well as other consumer products. These tariffs do not do so, at least not yet. Nor do they exempt certain minerals that are essential to manufacturing electric vehicle batteries or other high-end electronics. (Bloomberg has reported that as recently as Friday, Tesla was lobbying for an exemption for graphite, a mineral crucial to making EV anodes.)

    Finally, what is so striking about these tariffs is how they will be good for almost nobody.

    The tariffs will hurt the American oil industry. As I wrote earlier this week, U.S. energy companies have spent tens of billions of dollars on special equipment that can refine the sludgy, sulfurous crude oil extracted in Canada; Canadian companies, in turn, have sold us that crude oil at a discount and built infrastructure so that it can be used by the United States.

    The tariffs will hurt oil refineries. The U.S. refines about 18 million barrels of oil a day, but it extracts — even today, around its all-time high — only 13.5 million barrels a day. Most of the difference between what it refines and what it extracts is made up by heavy crude from Canada and Mexico, which blends well with the lighter petroleum produced by U.S. fracking wells. By raising the cost of Canadian and Mexican fuel imports, the cost of all refined products will rise.

    The tariffs will hurt anyone who buys gasoline in the Midwest and Mountain West, where Canadian oil plays a much larger role in local markets. They will hurt diesel and jet fuel prices in those regions too.

    But the damage will not be limited to the fossil fuel industry.

    The tariffs will hurt anyone who uses electricity across the parts of the country, especially the Northeast, that import large amounts of electricity from Canada’s roaring hydroelectric plants.

    The tariffs will hurt home builders and construction companies because the United States gets its best building-grade lumber from Canada. That lumber — already made more expensive by a climate change-intensified supply crisis — will now face additional taxes at the border.

    The tariffs will hurt anyone who wants to buy or rent a home in the United States because the lack of lumber will worsen the housing shortage and general affordability crisis.

    They will hurt automakers, who in the past three decades have constructed sophisticated supply chains spanning North America — a logistical dance that allows a single vehicle’s components and parts to cross the U.S., Canadian, and Mexico borders many times on their way to becoming a final product. They will hurt autoworkers, who depend on that supply chain. They will even hurt car dealerships, who will respond to higher prices by selling less inventory.

    If the dollar rises to accommodate the new tariff level, as some White House officials have argued, then the tariffs will hurt all U.S. domestic manufacturers because their products will become more expensive, and therefore less competitive on the global market.

    I am not saying, to be clear, that these tariffs are an economic catastrophe. We don’t actually know their economic cost yet — perhaps it will be minimal. But even then, they will still be a stupid waste of money that will help nobody, and which will make the U.S. economy neither more complex nor more secure.

    The tariffs are a warning. As recently as last week, Goldman Sachs analysts put the risk of tariffs at only a 20% chance of actually happening. They ignored what Trump had said he would do because it struck them as too implausible, too unwise, too patently harmful. Perhaps in the next two days they will be proven right. But Trump has begun to blather about many unwise and harmful ideas — invading Panama (where Secretary of State Marco Rubio is headed right now), annexing Greenland, making Canada (somehow) the 51st state. Many seem even more implausible than these tariffs, and yet Donald Trump says that he wants to do them, too. How much longer can Republican lawmakers and business leaders pretend that he doesn’t mean what he says? The chance of calamity has only just begun.

    Blue

    You’re out of free articles.

    Subscribe today to experience Heatmap’s expert analysis 
of climate change, clean energy, and sustainability.
    To continue reading
    Create a free account or sign in to unlock more free articles.
    or
    Please enter an email address
    By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
    Climate

    AM Briefing: NOAA Nominee Vows to Fill Forecaster Vacancies

    On Neil Jacobs’ confirmation hearing, OBBBA costs, and Saudi Aramco

    Would-be NOAA Administrator Vows to Fill Forecaster Vacancies
    Heatmap Illustration/Getty Images

    Current conditions: Temperatures are climbing toward 100 degrees Fahrenheit in central and eastern Texas, complicating recovery efforts after the floodsMore than 10,000 people have been evacuated in southwestern China due to flooding from the remnants of Typhoon DanasMebane, North Carolina, has less than two days of drinking water left after its water treatment plant sustained damage from Tropical Storm Chantal.

    THE TOP FIVE

    1. Trump’s nominee to head NOAA vows to fill staffing vacancies

    Neil Jacobs, President Trump’s nominee to head the National Oceanic and Atmospheric Administration, fielded questions from the Senate Commerce, Science, and Transportation Committee on Wednesday about how to prevent future catastrophes like the Texas floods, Politico reports. “If confirmed, I want to ensure that staffing weather service offices is a top priority,” Jacobs said, even as the administration has cut more than 2,000 staff positions this year. Jacobs also told senators that he supports the president’s 2026 budget, which would further cut $2.2 billion from NOAA, including funding for the maintenance of weather models that accurately forecast the Texas storms. During the hearing, Jacobs acknowledged that humans have an “influence” on the climate, and said he’d direct NOAA to embrace “new technologies” and partner with industry “to advance global observing systems.”

    Keep reading...Show less
    Yellow
    Climate Tech

    What’s Left of the LPO After the One Big Beautiful Bill?

    Some of the Loan Programs Office’s signature programs are hollowed-out shells.

    Blurred money.
    Heatmap Illustration/Getty Images

    With a stroke of President Trump’s Sharpie, the One Big Beautiful Bill Act is now law, stripping the Department of Energy’s Loan Programs Office of much of its lending power. The law rescinds unobligated credit subsidies for a number of the office’s key programs, including portions of the $3.6 billion allocated to the Loan Guarantee Program, $5 billion for the Energy Infrastructure Reinvestment Program, $3 billion for the Advanced Technology Vehicle Manufacturing Program, and $75 million for the Tribal Energy Loan Guarantee Program.

    Just three years ago, the Inflation Reduction Act supercharged LPO, originally established in 2005 to help stand up innovative new clean energy technologies that weren’t yet considered bankable for the private sector, expanding its lending authority to roughly $400 billion. While OBBBA leaves much of the office’s theoretical lending authority intact, eliminating credit subsidies means that it no longer really has the tools to make use of those dollars.

    Keep reading...Show less
    Electric Vehicles

    Can EVs Relieve Our Need to Speed?

    Electric vehicle batteries are more efficient at lower speeds — which, with electricity prices rising, could make us finally slow down.

    A Tesla as a snail.
    Heatmap Illustration/Tesla, Getty Images

    The contours of a 30-year-old TV commercial linger in my head. The spot, whose production value matched that of local access programming, aired on the Armed Forces Network in the 1990s when the Air Force had stationed my father overseas. In the lo-fi video, two identical military green vehicles are given the same amount of fuel and the same course to drive. The truck traveling 10 miles per hour faster takes the lead, then sputters to a stop when it runs out of gas. The slower one eventually zips by, a mechanical tortoise triumphant over the hare. The message was clear: slow down and save energy.

    That a car uses a lot more energy to go fast is nothing new. Anyone who remembers the 55 miles per hour national speed limit of the 1970s and 80s put in place to counter oil shortages knows this logic all too well. But in the time of electric vehicles, when driving too fast slashes a car’s range and burns through increasingly expensive electricity, the speed penalty is front and center again. And maybe that’s not a bad thing.

    Keep reading...Show less