In the wake of President Donald Trump’s re-election in November 2024, his administration swiftly implemented a series of aggressive tariff measures aimed at reshaping America’s trade relationships. These actions, while intended to bolster domestic industries, have introduced significant volatility into global markets and raised questions about their impact on the U.S. oil and gas sector—a sector Trump has pledged to usher into a “golden age.”
In early 2025, the Trump administration initiated substantial tariff measures, including a 25% tariff on all goods from Mexico and Canada, and a 10% tariff on Chinese imports. Energy exports from Canada faced a reduced tariff of 10%, aiming to “minimize any disruptive effects.” These tariffs took effect on March 4, 2025, triggering retaliatory measures and escalating trade tensions. On April 2, 2025, dubbed “Liberation Day,” the administration announced a universal 10% import tariff, with elevated rates for 57 trading partners. China faced a staggering 145% tariff on its goods. These actions led to immediate and severe market reactions, including a significant stock market downturn and heightened fears of a global recession.
The U.S. oil and gas sector, a cornerstone of Trump’s economic vision, has been notably affected by these trade policies. The introduction of sweeping tariffs has led to significant market instability. For instance, oil prices experienced sharp declines following tariff announcements, reflecting investor concerns over potential decreases in global demand. U.S. refining companies, such as Marathon Petroleum, Valero Energy, and Phillips 66, have seen substantial losses in market value. The tariffs have raised fears of reduced global oil demand and weaker refining margins, with some companies losing over $20 billion in market capitalization. The petroleum export sector, which had been a rare bright spot in reducing the U.S. trade deficit, now faces headwinds. Increased tariffs may deter international buyers, potentially reversing gains made in recent years.
President Trump’s tariff policies appear to be at odds with his commitment to revitalizing the U.S. oil and gas industry. The unpredictable trade environment has led to caution among investors and industry leaders. Mark Hatfield, departing managing director of Chevron Australia, highlighted concerns about the reliability of investments amid shifting policies. Tariffs on imported steel and aluminum have increased costs for drilling equipment and infrastructure, potentially hindering production expansion and innovation within the sector. By instigating trade conflicts, the administration risks alienating key trading partners, potentially leading to reduced market access for U.S. energy products and undermining the industry’s global standing.
While the intention behind President Trump’s tariff strategy may be to protect and promote American industries, the resultant economic turbulence poses significant challenges to the oil and gas sector. The promised “golden age” faces obstacles in the form of market volatility, increased operational costs, and strained international relationships. Moving forward, a recalibration of trade policies may be necessary to align with the administration’s energy ambitions and to foster a stable environment conducive to growth and innovation in the industry.
