Tariffs – what they are and what they mean for the US energy industry

A primer on tariffs and their impact on oil & gas, power, and beyond

If you have been anywhere near the business press the past three weeks, you have heard endlessly about tariffs.

US President Donald Trump announced, implemented, then partially paused, a tariff regime that would be the most aggressive since 1910.

Importantly, these tariffs are even higher than the rates set in the Smoot–Hawley Tariff Act, i.e. the Tariff Act of 1930, an aggressive protectionist measure implemented at the start of the Great Depression.

Much of today’s reaction comes with considerable bias, given the motivated reasoning used by people who identify strongly with one political party or another.

In this post, let’s cut through the tribalism, the politics, and the emotion.

Instead, let’s discuss what tariffs are and what they’re meant to accomplish.

Then, let’s estimate their effect on the energy industry.

We’ll start with a look at different sectors of the oil & gas industry. We’ll follow with a discussion of what tariffs will likely mean for renewables, batteries, and nuclear power.

As always, we’ll start from first principles, introducing vocabulary and context as we go.

Image created by Google Gemini via the prompt “a container ship full with cargo on the open ocean”

What are tariffs?