U.S. Tariffs Threaten Energy Supply Stability Amid Global Economic Uncertainty

U.S. tariff policies under the Donald Trump administration are intensifying strain on America's energy sector, with new analyses pointing to widespread disruption across oil production, renewables, and resource extraction. The sweeping tariffs—announced as part of a high-profile trade offensive—are triggering severe backlashes that threaten not only domestic industry growth but also the country’s global competitiveness.

According to research released by leading consultancy Wood Mackenzie in late May, the administration’s "Liberation Day" tariffs signal a pivotal turning point for the world economy. Unlike past milestones—such as China’s entry into the World Trade Organization, which spurred global expansion—the current tariffs are fracturing crucial trade relationships and accelerating the retreat from globalization. The ripple effects of these trade barriers are poised to linger well beyond short-term political cycles, potentially reshaping international commerce and investment flows for years.

Wood Mackenzie’s analysis outlines three potential scenarios for the future. In the most severe “trade war” scenario, U.S. effective tariff rates could soar over 30 percent. Should this unfold, global GDP is forecast to contract by nearly 3 percent by 2030—a drop that would reverberate through every facet of the global economy.

The U.S. oil industry faces particularly dire consequences. Once heralded as the backbone of American energy independence, the sector could see a sharp reversal of fortune. Under the harshest scenario, global oil demand would fall outright in 2026, and even subsequent recoveries would leave consumption trailing previous forecasts by about 2.5 million barrels per day in 2030. Oil prices—which have long buoyed the fortunes of U.S. shale drillers—could collapse to an average of just $50 per barrel in 2026. This level, the analysis indicates, would make it impossible for most Lower 48 shale producers to achieve profitable growth, jeopardizing jobs, investments, and the broader economic ecosystem tied to oil production.

The impact would not be limited to the U.S.; global supply growth outside America would also slow, especially as upstream budgets shrink and new developments face mounting delays. Investment in critical infrastructure and exploration projects would likely be deferred or canceled, undermining future supplies and adding long-term volatility to energy markets.

The power sector is seeing similar headwinds. The sudden imposition of tariffs introduces profound uncertainty into planning and investment decisions, especially in industries with five-to-ten-year project timelines. Many companies are already adjusting business plans, reporting delayed or withheld investments due to unpredictability in project costs and supply chain disruptions. In the renewables arena, these policy shifts risk locking the U.S. into a position as a high-cost location for clean energy innovation and storage technology, putting American firms at a disadvantage compared to international competitors.

While the administration framed tariffs as a tool to reshore manufacturing and insulate critical supply chains, the Wood Mackenzie report suggests the effect has been the opposite. Essential sectors such as metals and mining are facing sharp declines: aluminum demand could fall by almost 4 million tonnes in 2026; copper by 1.2 million tonnes; steel by a staggering 90 million tonnes; and lithium by 70,000 tonnes compared to baseline projections. These declines threaten the raw materials pipeline necessary for everything from grid upgrades to electric vehicle deployment.

The outlook for the broader energy and natural resources industries remains clouded by deep uncertainty. Experts caution that companies must grapple with the likelihood of persistent tariff regimes for the foreseeable future. As a result, riskier investments are expected to dry up, and businesses will shift focus toward strategic flexibility rather than long-term expansion. The cumulative effect is a potential rewiring of America’s energy landscape—with repercussions set to reverberate across domestic prosperity, global trade, and the transition to a lower-carbon future.