(Bloomberg) — A potential US tariff on oil imports would hand consumers a $22 billion bill as higher costs get passed on, while doing little to stimulate domestic crude production, according to Goldman Sachs Group Inc.
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The possible levy — which has been floated by the Trump administration, including on flows from Canada and Mexico — would mean a cost equivalent to $170 per household, analysts including Callum Bruce said in a note.
Global commodity markets including oil have been rattled since Donald Trump was sworn in last month, as the president presses home an aggressive series of moves to shake up the global trading system. In addition to the actions threatened against imports from Mexico and Canada, the administration has taken aim at shipments from China and vowed charges on steel and aluminum, as well as so-called reciprocal levies on all countries.
“We find that a 10% US tariff on crude oil would not significantly boost US production because of a mismatch between light oil the US produces and heavy oil many US refiners demand,” the analysts said in the note, which was dated Feb. 21. Meanwhile, average retail gasoline prices may increase by 7 cents a gallon if a 10% tariff is imposed, they said.
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