What do President Trump’s tariffs mean for energy? | The view from Washington and Canada
Feb 18, 2025
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Samantha Gross, an energy policy expert at the Brookings Institution, and Joseph Majkut, director at the Center for Strategic and International Studies, dive into the implications of President Trump's tariffs on the energy landscape. They discuss how tariffs could reshape U.S.-Canada energy relations and impact energy security and climate goals. The conversation also touches on the complexities of U.S. dependence on Canadian oil and the potential for American innovation in renewable energy technologies to lead the charge against global competition.
The Trump administration's new tariffs are reshaping global energy trade dynamics, leading to increased costs and supply chain uncertainties.
A fundamental belief in using tariffs to assert economic dominance reflects significant ideological differences in trade policies between Trump and Biden.
Canada's economic stability is jeopardized by U.S. tariff fluctuations, highlighting the critical interdependence in their energy trade relationship.
Deep dives
Implications of Tariffs on Global Energy Trade
New tariffs announced by the Trump administration have significant implications for global energy trade, particularly in the United States. The introduction of tariffs on imports, including steel and aluminum, affects not only the costs of energy infrastructure but also creates uncertainty in supply chains. For instance, tariffs on Chinese goods have led to retaliatory measures, influencing the prices of energy-related products. By leveraging tariffs as a negotiation tool, the administration aims to reshape trade relationships, yet the consequences for energy markets could be detrimental.
The Political Motivations Behind Tariff Policies
President Trump's focus on tariffs is driven by a desire to assert economic dominance and address perceived trade imbalances. The approach reflects a fundamental belief that tariffs are a means to achieve political and economic objectives, such as encouraging domestic manufacturing. Although some argue that trade deficits are not inherently problematic, the administration's perspective highlights a more aggressive stance toward global trade dynamics. This political strategy raises questions about the long-term viability of protectionist policies and their effects on domestic industries.
Differences in Tariff Strategies: Biden vs. Trump
The Biden administration's use of tariffs differs markedly from Trump's broader approach, focusing instead on specific sectors to bolster American manufacturing. While Biden aimed to create a robust solar panel and electric vehicle manufacturing base through targeted tariffs, Trump's strategy appears more generalized and expansive. This distinction suggests that while Biden's policies are intended to support nascent industries, Trump's broader tariff agenda might risk creating economic inefficiencies. These contrasting methodologies reflect differing philosophies toward trade and industrial policy in the context of energy security.
Canada's Challenges Amid U.S. Tariff Policies
Canada faces significant challenges due to the fluctuating tariff policies of the U.S., which creates a sense of economic uncertainty and insecurity. Canadian officials express concerns over the potential for retaliation and the impact of tariffs on cross-border trade, particularly in energy resources. The ongoing conflict highlights the interdependent relationship between the two countries as Canada navigates its own energy policies while ensuring they align with U.S. interests. As Canada seeks to diversify its markets, the unpredictable U.S. tariff landscape complicates efforts to maintain a stable economic footing.
Long-term Effects of Tariffs on Energy Transition
The shift toward a more protectionist trade environment poses challenges for the global energy transition and efforts to combat climate change. Tariffs may discourage international cooperation, resulting in fragmented approaches to energy policy and technology development. This potential balkanization of trade could hinder collective action necessary for reducing emissions and advancing clean energy technologies. As countries pursue self-sufficiency, the risk increases that they will prioritize short-term economic goals over long-term sustainability objectives.
In 2018, President Donald Trump said “I’m a tariff man”, declaring they were the way to make America rich again. Six years on and just weeks into his second term, he is putting that philosophy into practice. President Trump has announced a barrage of new and increased tariffs on imports into the US, including a 10% levy on all goods from China. He has threatened 25% tariffs on imports from Canda and Mexico, although those were put on hold for a month. And he has announced a strategy of reciprocal tariffs, promising to match other countries’ barriers to imports from the US with equivalent levies on their exports. It is a time of turbulence. What does it mean for the energy transition?
To analyse what all these actual and threatened tariffs mean for energy security, the economy and the climate, host Ed Crooks – Vice-Chair for the Americas at Wood Mackenzie - is joined by three policy experts from the US and Canada. Samantha Gross is the director of the Energy Security and Climate Initiative at the Brookings Institution in Washington, DC. Joseph Majkut is director of the Energy Security and Climate Change Program at the Center for Strategic and International Studies. And Andrew Leach is an energy and environmental economist at the University of Alberta.
Together they discuss the Trump administration’s strategy, and where it might lead. How do the tariff plans align with President Trump’s goals for boosting energy production and driving down prices for consumers? What happens to complex international supply chains as tariffs rise? And where does this leave the global effort to curb greenhouse gas emissions? Samantha Gross says the situation is ‘”rotten for the climate”. Does she have a point?
Let us know what you think. We’re on X, at @theenergygang. Make sure you’re following the show so you don’t miss an episode – we’ll be back in two weeks, Tuesday morning at 7am eastern time.
