Should’a bought that EV! Joseph Brusuelas notes tariffs should show up in gas prices in the Midwest pretty quick, as the region gets its oil from Canada.
Source: Brusuelas (2025).
Current price is about $3/gallon.
Source: EIA.
If the current price of petroleum (WTI) is $73.51/bbl. An increase in prices of 10% due to tariffs results in a $7.35/bbl increase. This implies a 18 cent increase in gasoline prices from the tariffs, using Jim’s rule of thumb. Using Yilmazkuday’s (2021) estimate, the increase should be about 17 cents after about three months.
Thanks, Trump!
Current prices at a local gas station in my area:
Regular $2.929
Premium $3.939
But perhaps a better source might be: https://www.gasbuddy.com/charts
You can select a national average or choose a location (e.g. Madison, WI) and go back as far as 10 years to see the monthly changes. I found the 10-year chart most revealing.
That should establish a baseline and give a picture of the significance of the tariff impact on gasoline prices.
Bruce Hall: I wanted PADD 2 because this area is mostly dependent on Canadian oil, and so I can do a direct comparison given future time series observation w/o taking into account location-specific state/local tax effects.
Bruce Hall So I’m understanding your comment to be that historically gas prices have sometimes been worse, therefore we shouldn’t be concerned about higher gas prices due to Trump’s tariffs. Have I got that right? That’s kind of a stupid argument. For one thing, it will put gas prices higher than they were last year when MAGA heads were in a rage over gas prices. So high gas prices under Biden are terrible, but even higher gas prices under Trump are just meh. Trump’s tariffs are self-inflicted wounds. And don’t forget that Canada could also impose export controls on oil and natural gas on top of Trump’s tariffs.
I believe you have caught the essence of Brucie’s argument.
Excuse me – his arguments. In all things, a circumstance that is just dandy under a Republican is intolerable and blame worthy under a Democrat. Every time.
Canada has retaliated with 25% tariffs on U.S. goods. Mexico has specified what form retaliation will take, but has said retaliation is coming.
China is preparing a WTO complaint and promised as yet unspecified retaliation.
The EU has
Speaking of oil, a campaign to legitimize an oil-for-nukes deal with Iran is underway on the right. Here’s a piece in “The American Conservative” entitled “Here’s How Trump Can Make a Strong Deal With Iran”:
https://www.theamericanconservative.com/heres-how-trump-can-make-a-strong-deal-with-iran/
Notably, the “how” in the title doesn’t refer to the structure of the deal, security assurances or anything like that. The article is mostly a sales job: A deal would make Trump look good; A deal would mean jobs and oil for the U.S, and so on.
There is some evidence in his personnel choices and statemwnts that Trump is already open to a deal:
https://www.timesofisrael.com/trump-said-set-to-tap-mideast-envoy-steve-witkoff-as-iran-point-man/amp/
While the choice of Elbridge Colby as DoD Undersecretary for Policy may have more to do with China than Iran, Colby is a prominent Iran dove:
https://responsiblestatecraft.org/elbridge-colby-pentagon-trump/
Last one, for now, I promise – ’cause it’s sunny and my bike needs exercise. Here is a calculation of the “tariff sensitivity” of various countries:
https://globalecon.substack.com/p/tariff-leverage-and-sensitive-countries
It amounts to a calculation of expots to the U.S. as a share of GDP. Mexico, Canada and Ireland are the top three. Anyone familiar with Ireland’s special way of doing international business knows that a distortion is at work here. The same is true for #4 Singapore. China is 20th on the list, behind heavyweights like Finland and the Slovak Republic.
There is a point so self-evident that I generally don’t bother to make it, but this list of tariff sensitivities reminds me – we trade a lot with our friends. China is a giant exporter, so is an exception to the rule, but our allies are among our biggest trading partners. When we put on gratuitous displays of economic power, we harm our allies at least as much as our adversaries. Service-heavy allies like the UK come in below China on the list, but goods-heavy allies like Germany, Japan and Italy are all more exposed than China.
Why the light treatment for China? Krugman speculates that corruption on the part of the felon-in-chief and his favorite courtier Elon explain China’s lesser tariff increase:
https://paulkrugman.substack.com/p/why-has-trump-gone-soft-on-china