Trump Mexico Tariff Threat Won’t Slow Koch’s U.S. Fuel Imports

(Bloomberg) -- Koch Industries Inc. will begin importing about 3,000 barrels a day of gasoline from the U.S. to Mexico next month despite concern that Mexico will retaliate against looming U.S. tariffs.

“It’s a very low probability that U.S. gasoline coming to Mexico will be affected” by U.S. President Donald Trump’s threat to impose tariffs on Mexican goods, Koch trading manager Eduardo Andrade told Bloomberg by phone from Veracruz. “The Mexican government has been very cautious, continually calling for dialogue, and that’s a good sign.”

Even so, Koch could look to Canada, Colombia, Europe or the Far East as an alternative, said Andrade. The trader plans to ramp up to 10,000 barrels a day of U.S. gasoline in the third quarter of the year, and it’s already importing 10,000 barrels of diesel a day, he said. The cargoes are arriving at Koninklijke Vopak NV’s terminal at the Veracruz port.

Koch has also held talks with international gasoline retailers that are seeking alternatives to state-owned Petroleos Mexicanos to supply their service stations in Mexico, said Andrade.

BP Plc, Repsol SA and Total SA have entered the Mexican fuel market over the past several years following landmark legislation in 2014 that ended Pemex’s monopoly in the sector. Pemex still owns a majority of Mexico’s distribution networks and infrastructure, however, with only a handful of private importers such as Koch and Glencore Plc moving their own product into the country.

Trump has threatened to impose a 5% tariff on all Mexican imports, and raise it monthly to as high as 25% by October, unless Mexico takes action to slow migration through its country and into the U.S.

To contact the reporter on this story: Amy Stillman in Mexico City at astillman7@bloomberg.net

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Mike Jeffers

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