By : Shivali Yadav

Abstract

Trump campaigned strongly on the plank of energy dominance, and since Day 1 of his presidency, executive orders have been issued to promote the fossil fuel industries. The domestic scene is shaped by actions such as freezing funds under legislation, including the Inflation Reduction Act, and boosting oil production. On the global stage, tariffs are the name of the game, and the reactions to them by various players are unfolding. The energy sector, as sensitive as it is to such policy upheavals, will likely be adversely affected, particularly the renewable energy sector.

Introduction

“We will drill, baby, drill,” Trump promised the crowd during his inauguration speech on January 20, 2025. He probably couldn’t have summarised his energy policies more succinctly if he had tried. This statement captures his ardent preference for fossil fuels and highlights his priorities for pushing policies that remove red tape, regardless of climate concerns. The assessment of Trump’s energy policies must be done in light of their domestic impact and their influence on international trade relations and exports. These questions will help us analyse the position of the United States as a global energy provider. 

Energy at Home: How the Policies Work on a Domestic Level 

“America First” defines Trump’s agenda for most things, including energy. The US energy sector is particularly vulnerable to trade disputes because oil and gas are major import and export commodities, and clean energy technologies are part of a complex global supply chain. Trump aims to inject prosperity into the U.S. economy by boosting domestic oil production, aligning with his electoral agenda of providing cheap oil.  

Trump’s priority is energy security, whether or not that comes at the expense of exacerbating climate change. To achieve this, he has prioritised dismantling any regulations that he sees as obstacles to the fossil fuel industry. Trump’s emphasis on a ‘return’ to fossil fuel dominance and “restoring American prosperity,” fails to take into account that during his first term as President, the United States became the world’s largest oil producer in 2018 and has claimed that position since, producing more oil than any other country ever. The idea of ‘energy dominance’ is founded on three planks: one, that national security is adversely impacted by high energy costs; two, that U.S. allies benefit from exports of abundant U.S. energy; and three, that energy security is becoming a key area of global competition. While these may be valid concerns, it is crucial to remember that most renewable energies have been removed from official definitions of ‘energy’, clearly indicating that priorities lean towards oil and gas.  

Upon assuming office on January 20, 2025, Trump signed six executive orders with direct relevance to the energy industry. He declared a National Energy Emergency to accelerate energy production and promptly approved new projects. However, this move serves as a thinly veiled excuse to increase fossil fuels while ignoring or shutting down the buildup of new wind, solar, and advanced geothermal projects. This will inflate emissions and profits for gas billionaires. It is essential to understand that this is the intention and not an action, especially when you take into account that the process of rescinding regulations is lengthy and can be challenged. Since the oil and gas sector needs to balance the lighter regulation and the commitments to capital returns, the immediate impact of the executive order may be the furtherance of exploration rather than heightened production.  

He withdrew from the Paris Agreement, which will take about a year to complete; nonetheless, several U.S. states and businesses will continue to comply with the Paris goals independently. He lifted the restrictions on oil, gas, and mineral production to unlock Alaska’s natural resources. This action aligns with the broader goal of reducing energy prices as government departments were mandated to find ways to bring down consumer prices, even at the cost of climate policies. Consequently, renewable energy projects have been adversely affected, with wind power development being leashed by a temporary suspension of all federal leasing and permits for wind projects. 

Biden-era policies for green energy, like the Inflation Reduction Act (IRA), have seen funding freezes, signalling a discontinuation of domestic support for green manufacturing. The Inflation Reduction Act was considered the most significant Congressional action to promote clean energy because it gave measures for transitioning to clean energy through tax incentives, grants, loans, and other investments. However, Republicans who represent states where investments have been spurred by the IRA may be reluctant to repeal it at the cost of their constituents’ interests. Despite this, there have already been orders for Government agencies to immediately stop all payments under the IRA and Infrastructure Investment and Jobs Act (IIJA). 

Trump has made his views on wind and solar energy clear – he believes they are too expensive for too little output and claims that wind energy harms marine life. He has instituted a ban on permits for both onshore and offshore wind energy projects, which may have a significant impact on wind development in the US. Moreover, he is against energy efficiency standards for appliances because they lead to inferior product choices for consumers.  

There is an evident contradiction between the stated policy of attaining energy dominance and attempted suppression of clean energy avenues; if there was genuine interest in achieving energy dominance, they would make efforts to provide consumers with affordable renewable energy such as wind and solar. Instead, they focus on fossil fuels that can help their bottom line. The elimination of safeguards leaves natural resources vulnerable to exploitation and sacrifices the position of the U.S. as a clean technology leader. At the same time, it strengthens China’s role, which has already emerged as a commanding force in producing critical green technologies.  

Trump’s message of stimulating carbon-intensive fuels is inherently harmful to decarbonization initiatives. Having said this, it may be that the streamlining efforts end up benefiting the renewable energy industry in an unintended manner. If the Trump administration amends the National Environmental Policy Act, which currently poses a hurdle to renewable projects, it could accelerate renewable energy projects by reducing permitting delays. His mission to end offshore wind projects might also be shelved if their benefits align with the administration’s larger mission to end inflation and reduce prices.  

The effectiveness of these policies amongst the structural and market inequalities remains to be seen. The IRA and IIJA are landmark legislative initiatives aimed at promoting energy-efficient investments. Amending or repealing these laws would require action from Congress, which is evenly divided enough to make this unlikely. Plus, recent Supreme Court decisions indicate the Supreme Court is sceptical about the administrative state taking more power for itself, and courts have taken the power of deciding how ambiguous laws like environmental legislations should be interpreted. Relying on current methods of using executive orders is not sustainable as they can be easily rescinded, and these regulatory policies need to last longer than Trump’s four years in office. Elon Musk’s active role in the current administration will influence politics despite his contrasting interests when it comes to electric vehicles.

Around the Globe: Exports, Tariffs, and International Influence 

Tariffs were a major component of Trump’s campaign platform, which he promised would bring manufacturing back to the United States, raise government revenue, and strengthen Washington’s negotiating leverage. However, these tariffs threaten to upset the decades of integration that North American trade has built around energy, resources, and manufacturing while also posing sovereignty threats for Canada and Mexico. Tariffs are being used to influence not only U.S. rivals but also their allies. Douglas Irwin’s ‘three R’s’ of U.S. tariff policy are evident here: revenue, reciprocity, and restriction.  

The U.S.’s extraction of more oil will have significant implications for the global energy market, and it may drive down prices. However, there are still organisations such as OPEC, which along with Mexico and Russia, control roughly 54% of the global oil market and wield better control over global oil production and prices. The reduction of prices may lead to a loss of revenue for Russian energy exports, which would affect its ability to fund military expenditures amidst its war with Ukraine. However, OPEC may reduce its production to keep global prices stable (if indeed U.S. production ramps up, which major U.S. oil and gas producers like Exxon doubt). 

The sensitivity of energy as an economic and security goal is recognised by the Trump administration to the extent that they limited energy tariffs to 10% for Canada rather than the broader 25% that Mexico faces. This concession to Canada, which provided 60% of the crude oil imports to the US in 2024, signals that affordability remains a concern for the Trump administration. The tariffs may not have as much of a material impact on consumers, but refineries will have to face higher input costs. Canada is pushing for a stronger relationship, relying on the fact that a large part of U.S. energy dominance comes from the deeply integrated energy trade between the two countries. The imminent increase in gas and electricity demand fostered by data centres and AI can be another negotiating factor for Canada. 

Retaliation could also be seen against the tariff policies. Canada was considering an export tax on energy exports, which would increase costs for U.S. consumers while offsetting the broader economic effects of the tariffs. China has also announced a tariff on energy imports from the U.S. to target U.S. energy dominance ambitions and gaps in critical mineral supply chains, but this trade conflict may escalate further. Mexico, on the other hand, lacks the economic leverage to impose retaliatory measures, as it imports 70% of its natural gas consumption from the U.S. The logistical challenges and extensive integration with the U.S. make it difficult for Canada and Mexico to find new markets, but China faces no such issue. Trump is pressuring different countries, such as urging Saudi Arabia to boost oil production to lower oil prices, an effort that Russian officials have called ‘unacceptable.’  

It has been reported that Trump’s tariffs on Canada, Mexico, and China will harm the US economy as China’s exports will potentially be reduced by 3.8%, Canada’s by 28%, and Mexico’s by 35%. RBC Capital Markets stated that tariffs were unlikely to lower U.S. gas prices and may instead lead to mildly higher prices. However, Goldman Sachs differed, saying that while tariffs, in general, are not good for oil because they affect demand and boost the U.S. dollar, Canadian natural gas exports to the U.S. may drop only by a modest amount and have little if any impact on U.S. gas prices.  

Conclusion

Despite extensive analysis, the effects of these policies remain to be seen as the administration unfolds. The domestic effects on gas prices and the influence of global players and reciprocal tariffs are sure to be followed closely, not only for their impact on the energy sector but also for the larger picture around global trade. The twin planks of ‘America First’ and ‘energy dominance’ may help consolidate American might – at the cost of upending the climate irreversibly. 

About the Author:

Shivali Yadav is a first-year BBA LLB (Hons.) student at Jindal Global Law School. Her areas of interest revolve around international relations, geopolitics, and the intersection of various fields with gender and media.

Image Source : https://www.pexels.com/photo/photo-of-an-industrial-factory-emitting-smoke-247763/