(Bloomberg) -- Commodity markets are pricing in elevated odds that US President Donald Trump’s sanctions against Canadian imports will include raw materials like oil, according to Goldman Sachs Group Inc., which warned of higher gasoline prices in the Midwest if penalties cover crude flows.
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Differences in regional pricing for commodities including crude, copper and aluminum signal an 85% probability of a 10% tariff being applied, analysts including Samantha Dart and Daan Struyven said in a note. Lower probabilities were linked with higher eventual tariffs, they added.
Raw materials markets from energy to metals are braced for a wave of disruption as Trump seeks to reshape global trade. The US administration has proposed a host of different approaches, with tariffs threatened against flows from its nearest neighbors, potential curbs against China, as well as commodity-specific sectoral levies. There’s also been talk of a universal tariff.
As it stands, Trump has threatened to move ahead with the Canadian and Mexico levies as soon as this weekend. For now, he has raised the possibility that oil may not be included in the penalties. Canada is the biggest overseas supplier of crude to the US, with Midwest refiners dependent on those shipments.
“Canadian oil tariffs would risk unpopular, if temporary, gasoline price increases in the US Midwest,” the analysts said.
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