What happened? The Trump Administration has, as previously indicated, confirmed that it is to introduce tariffs on Canadian and Mexican crude imports of 10% and 25%, respectively. Accounting for towards 4.5mb/d of US oil imports, (c4mb/d Canda and 0.5mb/d Mexico) the implied cost increases for US refiners (USD12bn p.a.) are likely to encourage them to look to source crude feedstocks elsewhere (assuming that is possible) but will inevitably, in our view, also force increases in US pump prices most especially in the short term as the added costs of tariffs prove impossible to quickly offset. With little likelihood that Canadian production will shut in and challenges for refiners to quickly seek alternatives, oil (raised transport costs) and refined product markets (assumes some shut-ins) may see some initial upside to price and margin given disruption to currently efficient, integrated supply chains. At current price levels oil is however certain to continue to flow and the price upside from disruption is likely to be modest. We assume that Canadian producers will most likely absorb some of the tariff impact passed on to their refining clients (a negative for their margins) and that those refineries that are located in the Mid-West (eg BP''s Whiting and Exxon''s Joliet) will be in a more challenged position to negotiate price reductions to offset the impact of tariffs on their business. As to the c500kb/d that comes from Mexico, the coastal end market bias of its sales and the higher tariff level argues that supplies will quickly be diverted to alternative end markets with its customers likely switching to similar heavy blends, (predominantly from Iraq). BNPP Exane View: Very hard to determine who suffers - outside the consumer To what extent the introduction of tariffs is absorbed by the oil producers, the refiners or passed through to the customer is, we would argue, difficult to judge at this time. Much will come down to location, access to, and...