Trump says 25% tariffs on Mexico and Canada may not include oil

Donald Trump has confirmed he will impose 25% tariffs on imports from Mexico and Canada from February, following through on threats issued weeks earlier.

The blanket tariffs on the countries’ products will come into effect on Saturday, Feb. 1.

However, speaking to reporters in the Oval Office on Thursday evening, Trump told reporters his administration was yet to determine whether oil imports would be included in the policy, noting that the decision was pinned on whether the two nations “treat us properly” and “if the oil is properly priced.”

“Oil is going to have nothing to do with it as far as I’m concerned,” he said. “We’re going to make that determination probably tonight on oil. Because they send us oil, we’ll see – it depends on what their price is.”

March contracts for Brent crude — the global benchmark for oil prices — were marginally higher at 8:06 a.m. London time, trading around $76.92 a barrel.

Trump told reporters the looming duties were being leveraged “for a number of reasons” and “may or may not rise with time.”

“Number one is the people that have poured into our country so horribly and so much,” he said. “Number two is the drugs fentanyl and everything else that have come into the country, and number three are the massive subsidies that we’re giving to Canada and Mexico in the form of deficits.”

“I’ll be putting the tariff of 25% on Canada and separately 25% on Mexico, and we’ll really have to do that because we have very big deficits with those countries,” he added.

Representatives for the Mexican and Canadian governments were not immediately available for comment when contacted by CNBC, although both nations have previously pledged to respond to tariffs with measures of their own.

“If there are U.S. tariffs, Mexico would also raise tariffs,” President Claudia Sheinbaum said at a press conference last week, according to news agency Reuters, adding that this would trigger price rises for American consumers.

Speaking to CNBC’s “Squawk on the Street” earlier this month, Canada’s minister of international trade Mary Ng said “everything is on the table” when it comes to responding to U.S. tariffs, refusing to rule out export taxes on energy exports to the United States.

“If you’re going to put tariffs on Canada, what it actually will do is make things more expensive for Americans,” she said.

There are also concerns that tariffs will hit consumers in Canada and Mexico, however. Earlier this week, for example, policymakers at the Bank of Canada warned that such measures by the U.S. could create persistent inflation in the country.

Both the Mexican peso and the Canadian dollar edged higher against the U.S. dollar on Friday morning, recovering losses seen overnight.

The peso was up 0.3% at 8:18 a.m. London time, while the Canadian dollar gained 0.2% against the greenback.