President Trump’s recent tariff reinstatements, including steep duties on Chinese imports and a 25% tariff on foreign steel, have directly impacted the world energy markets. The measures have raised costs for everything from natural gas pipelines to renewable installations, leading to reduced company spending in both traditional and clean energy sectors. Domestic drillers are scaling back as higher material costs compress margins and disincentivize new build.
In the renewables space, the tariffs have had different levels of impact. Wind and nuclear power are less impacted. Wind has some indirect exposure to tariffs, especially from steel and electrical component costs, with most of the headwinds coming domestically from grid limitations, NIMBY resistance, lengthy permitting, etc. Similarly, Trump-era tariffs don’t directly impact nuclear fuel or technology as much as they do solar or steel-heavy infrastructure, but nuclear also faces headwinds in the form of high construction costs due to tariffs on steel and imported components, along with regulatory burdens.
Conversely for solar power, Chinese-made solar components, which had benefited from years of price deflation due to massive manufacturing scale-ups, are now subject to substantial import duties. As a result, U.S. developers face significant cost hikes, which is expected to slow 2025 installations to around 20–25 GW, down from a projected 35–40 GW. While this may incentivize domestic manufacturing, short-term deployment will be affected.
Middle Eastern oil producers have responded to the anticipated global slowdown caused by U.S. tariffs by ramping up production. They aim to maintain market share, but it has led to falling global oil prices and greater volatility in energy markets, even causing Brent crude prices to plunge over 22% within a week. The International Energy Agency (IEA) recently cut its global oil demand growth forecast by 300,000 barrels per day, citing trade tensions as a major drag on global fuel needs. With oil demand now expected to grow by just 730,000 bpd in 2025, prices have fallen, leaving U.S. producers under pressure. West Texas Intermediate (WTI) crude is hovering near $60 per barrel, a level that keeps production alive but curbs expansion. Analysts warn that if tariffs continue push prices closer to $50, U.S. oil business models could be at risk. While consumers may benefit from lower prices at the pump, the broader economic signal is more concerning: slower demand points to a faltering global economy.
Despite near-term headwinds, the long-term global trajectory continues to favor renewables. BloombergNEF’s New Energy Outlook 2025 forecasts an 84% increase in global renewable energy capacity by 2030, with renewables serving 67% of global electricity demand by 2050. Solar PV alone could account for 23.5% of power generation globally by 2035. However, while solar and wind are now cheaper than fossil fuels in many markets, clean energy deployment is still constrained by grid bottlenecks, planning delays, fossil fuel subsidies, and uncertain government policy. Additionally, there’s concern about price cannibalization. As increased renewable penetration drives wholesale electricity prices down, it undermines investment incentives. As a result, new market mechanisms and policy support will be essential to sustain investment in the future.
Fossil fuels remain resilient, with coal, gas, and oil projected to represent about 25% of global power generation by 2050, with demand persisting in rapidly developing economies like India and Indonesia to meet energy demands. These countries are expected to experience continued emissions growth even as global totals fall, delaying the global peak.