WASHINGTON, D.C.: A proposed 10 percent U.S. tariff on oil imports could deal a US$10 billion annual blow to foreign producers, particularly Canada and Latin America, due to their reliance on U.S. refiners, according to Goldman Sachs.

President Donald Trump has delayed the tariff's start to March, lowering the rate for Canadian crude from 25 percent to 10 percent, but Goldman analysts expect that the U.S. will remain the dominant market for heavy crude despite the new costs.

Advanced U.S. refining infrastructure and lower operating costs make American refiners the most competitive buyers of heavy crude. Goldman estimates that for Asian refiners to consider switching to Middle Eastern medium crude, light oil prices would need to rise by 50 cents per barrel—a scenario that remains unlikely.

The bank projects that U.S. consumers will bear $22 billion in extra costs annually due to the tariffs, while the government would collect $20 billion in revenue. Meanwhile, refiners and traders could benefit by $12 billion by linking discounted U.S. light crude and foreign heavy crude to premium coastal markets.

Canada, the largest oil exporter to the U.S., sends 3.8 million barrels per day (bpd) via pipelines. These flows are expected to continue, but with price adjustments to absorb the tariff's impact.

Similarly, 1.2 million bpd of seaborne heavy crude from Mexico, Venezuela, and other Latin American suppliers will likely see price discounts to maintain their foothold in the U.S. market.

Goldman emphasized that Canadian producers face the biggest challenge, as they are "captured sellers" with limited alternative buyers. To stay competitive, they will likely absorb much of the tariff burden through price discounts, rather than passing the costs on to refiners or consumers.