The proposed 10 per cent United States tariff on oil imports could cost foreign producers $10 billion yearly and disrupt global trade flows, a report by Goldman Sachs has said.

The policy, which targets crude imports from Canada, Mexico and Venezuela, is expected to reshape supply chains, force price discounts and create economic ripples across energy markets.

The investment bank also estimates that U.S. consumers could face an annual $22 billion cost burden, with refiners and traders potentially benefiting $12 billion as they take advantage of price discounts.

Meanwhile, the U.S. government stands to generate $20 billion in revenue from the levies.

The tariff plan, expected to take effect in March, marks a shift in U.S. trade policy under President Donald Trump’s administration.

It follows recent retaliatory tariffs from China on American energy imports, adding further tension to global energy markets.

One major impact of the tariff would be on Canada’s oil sector, as the country exports about 3.8 million barrels per day (bpd) of crude to the U.S. While pipeline flows are expected to continue, Canadian producers would likely be forced to offer price discounts to remain competitive, given their limited access to alternative markets.

Similarly, 1.2 million bpd of seaborne heavy crude imports from Latin American producers, including Mexico and Venezuela, would require discounts to offset the tariff, ensuring continued U.S. demand.

Despite the levies, Goldman Sachs notes that U.S. refiners will remain dependent on foreign heavy crude, as their advanced processing capabilities and low costs make them the most competitive buyers. However, the tariff could make Middle Eastern medium crudes more attractive to Asian refiners, as they look to avoid the U.S. market turmoil.

Nigeria could also feel the effects of the tariff policy. As of February 2024, the Dangote Refinery, which has struggled to secure local crude—was importing about 2 million barrels from the U.S. The refinery resumed U.S. crude imports in November due to domestic supply challenges.

With some Nigerian companies also importing petroleum products from the U.S., the tariff could have implications for Nigerian consumers, possibly leading to increased costs or supply disruptions.

Additionally, any price volatility in global crude markets could impact Nigeria’s revenue projections, given the country’s dependence on oil exports.

While the tariff is expected to hurt foreign producers, refiners and traders could see major benefits. Goldman Sachs projects that linking discounted U.S. light crude and foreign heavy crude to premium coastal markets could create $12 billion in gains for traders.

However, Goldman warns that for Middle Eastern producers to capture a greater share of the Asian market, light oil prices would need to rise by 50 cents per barrel to make medium crudes from the Middle East more attractive to refiners in Asia.