Trump's Tariffs Could Force US To Buy Venezuelan Oil: 'There's No Other Option On The Table,' Says Canada's Foreign Minister Melanie Joly

Canada’s Foreign Minister Melanie Joly warned that proposed U.S. tariffs could force America to rely on Venezuelan oil imports, as tensions escalate ahead of President Donald Trump‘s planned 25% levy on Canadian goods starting Feb. 1.

What Happened: In an interview with the Financial Times, Joly emphasized Canada’s strategic importance as an oil supplier, noting that Canadian crude is currently sold at a discount to U.S. refiners in Texas. The warning comes as Trump confirmed sweeping tariffs against both Canada and Mexico, citing concerns over immigration, trade deficits, and drug trafficking.

"There's no other option on the table, and this administration doesn't want to work with Venezuela," Joly said.

The energy trade stakes are significant. Canada supplies approximately 20% of U.S. oil consumption and 60% of imported crude. Many U.S. refineries are specifically configured for the heavy crude grades produced by Canada and Venezuela, rather than the lighter oil from America’s shale fields.

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Why It Matters: Markets reacted sharply to Trump’s announcement, with the Invesco CurrencyShares Canadian Dollar Trust FXC falling 0.6% and the USD/CAD rate climbing to 1.4480. The United States Oil Fund USO saw initial gains as traders weighed supply chain implications.

Canadian officials are mounting a diplomatic offensive to prevent what could become the first major trade war of Trump’s potential new administration. Energy Minister Jonathan Wilkinson has threatened retaliatory tariffs on American goods, including steel and orange juice, while Ottawa has pledged $1 billion for border security improvements.

The SPDR S&P 500 ETF Trust SPY declined in late trading Thursday as investors assessed the potential economic impact of escalating trade tensions between the longtime allies.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.