Kathmandu: A new study by energy consultancy Wood Mackenzie (WoodMac) warns that the tariff policies implemented under former U.S. President Donald Trump are having severe negative consequences on the American energy sector, from oil production to renewable energy investment. The report concludes that the policy, intended to boost domestic industries, is instead undermining U.S. energy independence and future growth.

Deepening Damage to Oil and Economic Growth
The report outlines three possible scenarios, the most severe being a “trade war” scenario in which U.S. effective tariffs exceed 30%. Under this scenario, global economic growth could shrink by 2.9% by 2030, with U.S. oil producers bearing the brunt of the damage.

The oil sector, a pillar of U.S. energy independence, is expected to face a dramatic drop in demand. Global oil demand would fall significantly by 2026, and even if it recovers slightly, it would still be 2.5 million barrels per day below optimistic projections by 2030. Oil prices, as a result, could plunge to an average of $50 per barrel, a level too low for shale producers in the Lower 48 states to remain profitable.

This would trigger a sharp decline in investment, threaten jobs, and ultimately cause a major setback in U.S. oil production capacity.

Renewable Energy Investment at Risk
The impact extends to the renewable energy sector, which the report says is suffering from cost increases and investment uncertainty due to the tariffs. In an industry that relies on long-term planning cycles, such volatility discourages new projects and leads companies to postpone or cancel investments.

Despite the Trump administration’s claims that tariffs would bolster domestic manufacturing, WoodMac finds that they have instead made the U.S. less attractive for clean energy development, slowing progress in both renewable energy generation and battery storage infrastructure.

Metals and Mining Also Hit Hard
Tariff-driven disruptions are also threatening the supply chain of key industrial metals, which are essential for both traditional and green energy infrastructure. By 2026, demand reductions are projected to be:

-Aluminum: down by nearly 4 million tons

-Copper: down by 1.2 million tons

-Steel: down by 90 million tons

-Lithium: down by 70,000 tons

These declines could undermine future energy development, particularly in the transition to electric vehicles and renewable infrastructure.

A Caution for the Future
WoodMac’s analysis warns that the uncertainty created by long-term tariff policy will lead to cautious strategies, with energy and natural resource companies shifting away from high-risk ventures. The industry may prioritize flexibility over innovation, potentially stalling U.S. leadership in global energy transformation.

The report concludes that instead of fostering energy independence, the Trump-era tariff policies may be pushing the U.S. toward higher costs, reduced competitiveness, and slower energy transition progress, all while increasing vulnerability to global market shifts.