By: Mohamed Sahr

mohamedsahrpro@gmail.com

The potential ramifications on oil prices if Canada and Mexico choose to retaliate using oil production, where they have a strategic advantage, will cause immediate increase in oil prices globally while enabling both countries to make up for significant loss in revenue.

The impact on crude oil production if both countries retaliate by cutting crude production to force a hike in oil prices.

As major oil producers in the Americas, tariffs of their own on Oil drilling technology from the US will ramp up oil production costs with negative implications for pump prices globally. Also, the futures market will lock all of the potential impacts into their investment decisions and ramp up speculative acquisitions in the short term to cash in on the potential oil price global hikes in the future with dire consequences for small importers like Sierra Leone.

So what can Sierra Leone do to mitigate the potential impacts of the aforementioned on our heavily oil import dependent economy?

In my view publicly funded oil import Bonds for reserve purposes should be considered. In essence Government should sell oil import bond to the public, primarily targeting the common everyday citizen. Cost per bond could be as low as Le10. The funds subscribed will then be used to finance a new national oil reserve management company. The company will operate in the futures market, store oil procured when prices are low like now and release parts of it to the market for two purposes only to manage price and maintain availability in the short term as well afford the country the capacity to subsidise cost for strategic operations such as agriculture, security and manufacturing.

President Donald Trump announced extraordinary new tariffs on Mexico, Canada and China signing the long-promised economic policy at his Mar-a-Lago club on Saturday. The Trump administration said tariffs are aimed at curbing the flow of drugs and undocumented immigrants into the US, but they potentially risk substantial price increases for American consumers across an array of common goods from avocados to sneakers to cars.

Hours later, Mexican President Claudia Sheinbaum said her country will impose retaliatory tariffs, and Canadian Prime Minister Justin Trudeau announced “far-reaching” retaliatory levies. China’s commerce ministry said it will file a complaint with the World Trade Organisation and “take corresponding countermeasures,” without elaborating.

The tariffs, and subsequent retaliation, risk igniting a trade war that could significantly damage the economies of the targeted countries and the United States. In anticipation, Trump’s executive action includes a clause that allows the president to expand the tariffs if a country imposes new tariffs on the United States.

The new policy represents a reversal of virtually duty-free trade among the three North American nations that’s existed for several years — and an expansion of a frosty trade war between China and the United States that has escalated over the past two administrations.

As Trump has repeatedly promised over the past several months, the tariffs will amount to a significant 25% duty on all imports from Mexico and most goods from Canada, and a 10% tariff on Chinese goods imported into the United States.

The tariffs will have no exemptions, and the executive action Trump signed Saturday will close the so-called de minimis loophole that had allowed shipments of $800 or less to come into the United States tax-free — a key provision used by many American small businesses but also Chinese e-commerce companies such as Shein and Temu. Trump administration officials said the loophole prevented customs officials from properly inspecting those packages.

Although Trump administration officials said Saturday the tariffs were designed to stop the flow of fentanyl and undocumented immigrants, they gave no specific benchmark for the new import taxes to be lifted  other than the cessation of the drugs and undocumented immigrants coming into the country.

Notably, the tariffs included an important carve-out — the tariff on Canadian energy products will be 10%. Many Americans rely on Canadian energy products, including oil, electricity and natural gas, for fuel and home heating. The cost of those items could rise when the tariffs hit.

To put the tariffs in place, Trump in his executive action declared a national economic emergency, invoking the International Emergency Economic Powers Act, known as “IEEPA,” which authorizes a president to unilaterally manage imports during a national emergency. The tariffs are set to go into effect Tuesday at 12:01 am ET.

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