President-elect Donald Trump is talking about tariffs against Mexico, Canada and China. Many Americans seem OK with the idea. After all, as someone said, so what if the cost of avocadoes goes up?
Unfortunately, it is not just avocadoes that will increase in price. From Mexico alone, the U.S. imports a significant number of tomatoes and other fruits, along with vegetables, spices, condiments, coffee, teas, cocoa, chocolate, sugar, syrups, nuts and seeds, plus several popular wines, beers and other spirits. And that is a short list of just food items.
Other imports from Mexico include crude oil, cars and car parts. Canada is also a major crude oil supplier, along with canola oil, fruits and grains.
Since both Mexico and Canada are major crude oil exporters to the U.S., it is important to look at the overall crude oil import picture to see what such a tariff would mean.
The U.S. Energy Information Administration reports the U.S. is currently the world’s largest oil producer at 14% of all production; but this country also imports 2.37 billion barrels of oil per year, mostly from Canada, Mexico, Saudi Arabia, Iraq and Brazil. That is 76% of what Americans use daily. Crude oil is used for gasoline and other fuels, but also in clothing, plastics, solvents, refrigerants, paint and many other everyday items.
For those who say the U.S. simply needs to increase its domestic production, they should know there is a major problem with that proposition, and it has to do with both history and product demand.
Oil production has been a major industry in this country since 1859 when the first well came in at Titusville, Penn. For the past 165 years, petroleum drilling has discovered many major oilfields, especially in the states of Alaska, Kansas, Oklahoma, Texas, Louisiana and California. However, because those fields have been heavily produced — especially in the booms of the 1920s-1930s, 1950s and late 1970s/early 1980s — much of the domestic production is now reduced, recovery in many areas is secondary or tertiary.
In other words, the days of major gushers and 1,000-plus barrels of oil per day wells are long gone because of years of production and resource depletion. Secondary and tertiary production are much more expensive for companies, frequently with much lower rates of return on investments and fraught with environmental concerns.
Overall, domestically, the U.S. currently produces 11.2 million barrels of oil per day, but the country consumes 19 million barrels per day. Even people who are bad at math can see there is an average of nearly 8 million barrels per day shortfall, difficult to fill when the domestic resources in the ground are depleted.
The obvious solution would be for consumers to curb their dependence on petroleum; but most people do not want to give up driving their cars, certain types of clothing, paint, fertilizers for food, plastic components or a wealth of other items.
To keep consumers happy, the U.S. government has for years kept gasoline prices artificially low, inadvertently strengthening the dependence on crude oil imports. Most people would not want to pay the same $6.57 per gallon unsubsidized citizens in the European Union pay. It is uncertain if the Trump administration would continue subsidizing in the face of tariffs.
Economists say tariffs cost consumers, not the product’s country of origin. If a tariff is 10%, the average cost to a family is $1,253 per household. The 25% tariff on Mexican and Canadian goods could be an increase to $3,132 per household. Not too many people want to see that kind of impact on their household budgets for the basics of gasoline, food and clothing.
Another solution would be diplomacy, open dialogue and agreements between the U.S., Canada and Mexico to help all three countries. Currently, leaders in Mexico and Canada are starting talks to help protect themselves against American tariffs while strengthening their exports.
Whether or not the next Trump administration is open to such a traditional move is doubtful given the past, but it would be worth trying to help ease the burden on U.S. consumers.
Tallent was a journalism faculty member at the University of Idaho for 13 years before her retirement in 2019. She is of Cherokee descent and is a member of both the Indigenous Journalists Association and the Society of Professional Journalists. She also writes for FaVS (Faith and Values) News.
