Goldman Sachs predicts that China’s retaliatory tariffs on U.S. goods in response to U.S. tariffs will have minimal impact on energy prices. The investment bank also forecasts that U.S. tariffs on Canadian crude oil will not cause significant fluctuations in oil prices this year or next.
In a report released on Tuesday, Goldman Sachs noted that while China plans to impose a 10% tariff on U.S. oil and a 5% tariff on liquefied natural gas (LNG) and coal, these measures are unlikely to alter global supply or demand. As a result, price increases will be limited in the short term.
The bank suggests that U.S. energy products facing barriers in the Chinese market will quickly find alternative buyers, and China will source imports from other countries.
Goldman Sachs anticipates a substantial increase in U.S. LNG exports, with supplies from the Atlantic region potentially reaching Asian markets.
Analysts predict a shift in U.S. coal exports from China to South Korea and Japan, while coal produced in the Pacific region is expected to flow into China. Since China imports a relatively low volume of U.S. crude, they believe alternative imports will be sufficient to meet its needs.
However, Goldman Sachs warns that China’s tariffs could disrupt long-term purchase contract negotiations between U.S. LNG export facilities and Chinese buyers, potentially causing ripples in the commodity market.
U.S. President Donald Trump has postponed imposing tariffs on imports from Canada and Mexico. The administration had planned to apply a 10% tariff on Canadian energy, lower than the 25% tariff proposed for other goods.
Despite the potential tariffs on Canadian crude oil, Goldman Sachs believes that global supply will remain stable, with minimal impact on oil prices this year and next.
However, they predict that regions in the U.S. Midwest heavily reliant on Canadian crude oil may experience an increase in gasoline prices.
