The comprehensive set of tariffs introduced by Donald Trump on Wednesday features an exemption for the energy sector, which advocates argue is a clear indication of the president’s allegiance to his prominent oil donors at the expense of the American public.
Trump’s new 10% universal tariffs, which are even steeper for several major economies, are causing turmoil in the global economy and are anticipated to raise consumer prices in the US. However, these tariffs will not affect numerous fossil fuel products, including liquefied natural gas imports, crude oil from Canada, and the raw materials required for producing petrochemicals.
Oil industry representatives welcomed the exemption. “We appreciate President Trump’s choice to exclude oil and natural gas from the new tariffs, highlighting the complexity of integrated global energy markets and the significance of America’s status as a net energy exporter,” stated Mike Sommers, leader of the American Petroleum Institute, the leading US fossil fuel lobbying group, in a post on social media. “We will keep collaborating with the Trump administration on trade policies that bolster American energy dominance.”
Sommers’ remarks were distributed by the White House in a fact sheet the following day.
The exemption followed the fossil fuel industry’s substantial contributions of $96 million to Trump’s re-election efforts and affiliated political action committees as he committed to deregulating the sector and lifting environmental restrictions. Although this amount is less than the $1 billion Trump had sought during a notable meeting at his Mar-a-Lago club, it still reflects unprecedented spending levels.
“Oil and gas billionaires just secured themselves an exemption from Trump’s tariffs,” said Stevie O’Hanlon, a spokesperson for the Sunrise Movement, a youth-led environmental justice organization, on Thursday. “While the rest of us are grappling with soaring prices and increasing temperatures, they are perched on their thrones raking in billions. We need to put an end to this oligarchy immediately.”
In the initial three months of his second term, Trump has followed through on his commitments to undermine green policies. He has also fostered a close relationship with the industry, appointing numerous industry figures to his administration.
Last month, the president hosted a meeting with over a dozen oil executives at the White House, where he suggested the idea of an energy exemption from his tariff package, as reported by the Washington Post, with one insider indicating uncertainty over whether Trump was joking or making a legitimate policy promise.
The exemption is designed to protect the oil and gas sector from the market turmoil brought on by the tariffs – a concern they have voiced in recent weeks. However, it has not entirely insulated them from the repercussions.
Although the tariffs will not be directly imposed on many oil and gas products, they could still elevate production costs, as tariffs on steel and aluminum may increase the expenses associated with constructing fossil fuel infrastructure. Moreover, less than a day after the tariff package was revealed, commodity markets plummeted, with oil prices dropping into negative territory due to diminished fuel demand often triggered by a slowdown in global economic activity.
“At this early stage, we can’t fully analyze the long-term effects of these tariffs on the global economy, but immediate severe repercussions are undoubtedly anticipated,” noted Claudio Galimberti, an economist at Rystad Energy, in a Thursday analysis.
Trump has consistently vowed to counter inflation and decrease costs for everyday Americans. Nevertheless, his latest tariffs may result in price hikes on a range of goods, extending from gasoline and vehicles to wine and chocolate, according to experts.
“Donald Trump isn’t just breaking his promise to reduce prices for Americans,” remarked Pete Jones, a spokesperson for the green advocacy organization Climate Power. “He’s ensuring that they pay more while his billionaire oil donors pay less.”
