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If every country that has a US trade deficet this tax is applied this will prove interesting! This will seriously impact Kanada who has the largest trade surplus with the US... Wack those evil Kanadians........Given Kanada is the US biggest trading partner.....
I think China and India are laughing at the moment!!!!!!!! This means as their economies are more energy dependant will mean that they have just received a advantage!
Border Wall Tax on Mexican Crude Oil Would Cost U.S. Drivers
by Joe Carroll
and Laura Blewitt
January 26, 2017, 11:27 PM GMT January 27, 2017, 10:00 AM GMT
U.S. motorists probably would foot the bill for President Donald Trump’s 20 percent border-wall tax as domestic refiners reliant on Mexican crude pass on the cost.
Less than a week after assuming office, the Trump administration indicated it may impose the levy on imports from Mexico to finance construction of a barrier along the southern U.S. border. American companies imported about $14 billion in oil and related products in 2015, government data show. White House press secretary Sean Spicer noted that the tax was only one idea being mulled to pay for the wall, a cornerstone of Trump’s campaign.
The tax, which Spicer characterized in a briefing Thursday as "theoretical," would apply to countries with which the U.S. has a trade deficit. That would seemingly exempt Canada, with which the U.S. ran a surplus of $11.9 billion in 2015. However it may include Saudi Arabia, the second-largest foreign supplier of crude to the U.S., which sent $31 billion more to the U.S. than it took back in 2012.
Most U.S. refineries reside inside Foreign Trade Zones, including the biggest U.S. importer of Mexican crude, a joint venture owned by Royal Dutch Shell Plc and Mexico’s state-controlled driller Petroleos Mexicanos.
Trade Zones
The zone is “almost like an embassy, and things will not be taxed until they exit the zone,” Janice Mosher with U.S. Customs and Border Protection said in a telephone interview. The wider range of countries that a tax would apply to would increase the hit to American drivers.
The venture’s refinery in the Houston suburb of Deer Park imported almost 52 million barrels of Mexican oil during the first 10 months of 2016, according to government data. Valero Energy Corp., LyondellBasell Industries NV and Exxon Mobil Corp. were the next three biggest U.S. importers of Mexican oil during that period. The combined supply imported by those companies was enough to fill more than 30 supertankers, based on Bloomberg calculations.
"Assuming they are proposing to impose a 20 percent tax on imports on countries from which we run a trade deficit, then we can expect gasoline prices to rise 30 cents per gallon," said Phil Verleger, president of the economic-consulting company PKVerleger LLC by phone from Carbondale, Colorado.
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Fuel makers in the U.S. refining heartland of Texas and Louisiana would either pass the increased expense of using Mexican oil on to consumers by raising gasoline and diesel prices, or search for alternative crude sources, said Justin Jenkins, an analyst at Raymond James in Houston. Because many of those refineries are geared to process Mexico’s brand of heavy, noxious oil, the lighter crude harvested from U.S. shale fields wouldn’t work as a replacement.“If you’re going to try to find something similar, the U.S. doesn’t really produce anything like” Mexican crude, Jenkins said. “Either prices would have to change or refining margins” would shrink, he said.
I think China and India are laughing at the moment!!!!!!!! This means as their economies are more energy dependant will mean that they have just received a advantage!
Border Wall Tax on Mexican Crude Oil Would Cost U.S. Drivers
by Joe Carroll
and Laura Blewitt
January 26, 2017, 11:27 PM GMT January 27, 2017, 10:00 AM GMT
- Tax could be used on any country with trade deficit: Spicer
- Pump prices could increase 30 cents a gallon, Verleger says
U.S. motorists probably would foot the bill for President Donald Trump’s 20 percent border-wall tax as domestic refiners reliant on Mexican crude pass on the cost.
Less than a week after assuming office, the Trump administration indicated it may impose the levy on imports from Mexico to finance construction of a barrier along the southern U.S. border. American companies imported about $14 billion in oil and related products in 2015, government data show. White House press secretary Sean Spicer noted that the tax was only one idea being mulled to pay for the wall, a cornerstone of Trump’s campaign.
The tax, which Spicer characterized in a briefing Thursday as "theoretical," would apply to countries with which the U.S. has a trade deficit. That would seemingly exempt Canada, with which the U.S. ran a surplus of $11.9 billion in 2015. However it may include Saudi Arabia, the second-largest foreign supplier of crude to the U.S., which sent $31 billion more to the U.S. than it took back in 2012.
Most U.S. refineries reside inside Foreign Trade Zones, including the biggest U.S. importer of Mexican crude, a joint venture owned by Royal Dutch Shell Plc and Mexico’s state-controlled driller Petroleos Mexicanos.
Trade Zones
The zone is “almost like an embassy, and things will not be taxed until they exit the zone,” Janice Mosher with U.S. Customs and Border Protection said in a telephone interview. The wider range of countries that a tax would apply to would increase the hit to American drivers.
The venture’s refinery in the Houston suburb of Deer Park imported almost 52 million barrels of Mexican oil during the first 10 months of 2016, according to government data. Valero Energy Corp., LyondellBasell Industries NV and Exxon Mobil Corp. were the next three biggest U.S. importers of Mexican oil during that period. The combined supply imported by those companies was enough to fill more than 30 supertankers, based on Bloomberg calculations.
"Assuming they are proposing to impose a 20 percent tax on imports on countries from which we run a trade deficit, then we can expect gasoline prices to rise 30 cents per gallon," said Phil Verleger, president of the economic-consulting company PKVerleger LLC by phone from Carbondale, Colorado.
Keep up with the best of Bloomberg Politics.
Get our newsletter daily.
Sign Up
Fuel makers in the U.S. refining heartland of Texas and Louisiana would either pass the increased expense of using Mexican oil on to consumers by raising gasoline and diesel prices, or search for alternative crude sources, said Justin Jenkins, an analyst at Raymond James in Houston. Because many of those refineries are geared to process Mexico’s brand of heavy, noxious oil, the lighter crude harvested from U.S. shale fields wouldn’t work as a replacement.“If you’re going to try to find something similar, the U.S. doesn’t really produce anything like” Mexican crude, Jenkins said. “Either prices would have to change or refining margins” would shrink, he said.
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