Financial giant Goldman Sachs has expressed optimism that President Donald Trump's tariffs on Canada, Mexico, and China "will be temporary."
Trump on Saturday signed an order to impose stiff tariffs — 25% on imports from both Canada and Mexico, 10% on imports from China — to force the three countries to stop the spread and manufacturing of fentanyl, in addition to pressuring Canada and Mexico to limit any illegal immigration into the U.S.
Goldman Sachs even indicated "a last-minute compromise cannot be completely ruled out" for the tariffs scheduled to take effect Tuesday, Financial Times reported Monday.
"The White House fact sheet on the tariffs and the executive orders highlight fentanyl and immigration as the motivation for the tariffs, but there are no explicit criteria provided for lifting them beyond cooperation on and an improvement in the immigration and fentanyl situations," a Goldman Sachs representative told the outlet.
"In light of their potential economic effects and the fact that the White House has set general conditions for their removal, we think it is more likely that the tariffs will be temporary, but the outlook is unclear."
In an email to Financial Times, Goldman Sachs cited that energy imports from Canada and Mexico would face a 10% tariff.
"While the details of products eligible for the lower energy tariff have not been released, we expect it to cover oil, gas, and electricity," Goldman Sachs said. "A Federal Register notice is likely to be published with implementation details, including specific product codes eligible for the lower rate."
That being the case, "potential tariff-driven decline in U.S. natural gas imports from Canada is too small to significantly raise U.S. natural gas prices," Goldman Sachs said.
The bank added that "Canadian oil producers are expected to eventually bear most of the burden of the tariff with a $3 to $4 a barrel wider-than-normal discount on Canadian crude given limited alternative export markets, with U.S. consumers of refined products bearing the remaining $2 to $3 a barrel burden."
According to Goldman Sachs, seaborne oil imports from Canada and Mexico will be rerouted to other markets, with the U.S. replacing those supplies with crude from OPEC, Latin America, and refined products from Europe.
The financial services company also told Financial Times that although Trump's order includes a "retaliation clause" should one of the countries respond by imposing restrictions or tariffs on U.S. exports, "it has no automatic effect."
Reuters contributed to this story.