The Trump administration's tariff policies are triggering a domino effect across global energy markets, with new research warning of reduced oil demand, stalled renewable energy projects, and long-term economic contraction. A Wood Mackenzie analysis reveals that escalating trade tensions could push the U.S. into costly energy isolation while destabilizing global supply chains.
Oil Industry Faces Existential Threat
Under the worst-case 'trade war' scenario, global oil demand could decline by 2.5 million barrels per day by 2030, with prices collapsing to $50/barrel in 2026. This would devastate U.S. shale producers already operating on thin margins, forcing production cuts and investment freezes. The report notes that "the economics of Lower 48 drilling won't support production growth with crude at $50 per barrel."
Renewables Caught in Crossfire
Tariffs are creating planning chaos for renewable energy developers, with five-to-ten-year project timelines disrupted by unpredictable material costs. Wood Mackenzie warns the U.S. risks becoming a high-cost location for clean energy infrastructure, contradicting the administration's energy independence goals.
Metals & Minerals Demand Plummets
Critical materials for energy transition face severe impacts:
Aluminum demand down 4M tonnes by 2026
Copper demand drops 1.2M tonnes
Steel demand falls 90M tonnes
These declines threaten mining operations and manufacturing capacity worldwide.
Long-Term Strategic Shifts
Energy companies are reportedly deferring investments and prioritizing flexible strategies as tariff uncertainty becomes the "new normal." Analysts predict this could alter U.S. energy development trajectories for decades, with global GDP potentially contracting 2.9% by 2030 under sustained trade conflicts.
