Investing.com - US natural gas prices soared Monday following the imposition by President Donald Trump of tariffs on imports from Canada, a major exporter to the US.
At 05:55 ET (10:55 GMT), natural gas prices rose 8% to $3.286 per million British thermal units, or MMBtu.
Trump on Saturday issued executive orders that would impose taxes of 25% on all imports from Mexico and 25% on all non-energy imports from Canada, effective on Feb. 4. Most energy commodities imported from Canada would be subject to a lower, 10% tariff.
The US-Canada energy trade is particularly vulnerable to tariffs, for both sides. More than 4mn b/d of Canada's exports are wholly dependent on pipeline routes to and through the US. Conversely, many refineries in the US midcontinent have no practical alternative to the Canadian crude.
In 2022, about 99% of the US’s total annual natural gas imports were from Canada, and nearly all were by pipeline. Its imports of natural gas from Canada help support fluctuating supply in the US during the winter months.
That said, Goldman Sachs thinks the new tariffs are likely to have a limited near-term impact on global oil and gas prices.
"Potential tariff-driven decline in US natural gas imports from Canada is too small to significantly raise US natural gas prices," the bank said.
"Canadian oil producers are expected to eventually bear most of the burden of the tariff with a $3 to $4 a barrel wider-than-normal discount on Canadian crude given limited alternative export markets, with U.S. consumers of refined products bearing the remaining $2 to $3 a barrel burden," the bank said.
According to the note, seaborne oil imports from Canada and Mexico will be rerouted to other markets, with the US replacing those supplies with crude from OPEC, Latin America, and refined products from Europe.
Goldman Sachs expects the US tariffs on Mexico and Canada to be relatively short-lived.