As President-elect Donald Trump outlines his agenda for the new administration, governments, think tanks, and politicians worldwide are recalibrating their expectations for the next four years. With his habit of announcing key policies via social media, Trump recently shared his views on tariffs affecting the U.S.’s three largest trading partners on Truth Social. As the leader of the world’s most powerful nation, his actions will have global consequences, compelling other nations to prepare for significant changes when the new government takes office in January.
Election Results and Global Implications
The outcome of the U.S. election carries profound implications for global geopolitics and trade. This year’s election, against a backdrop of domestic and international challenges, was expected to be a close contest. Instead, Trump secured a resounding victory, making a stunning comeback after losing the 2020 election. With Trump’s victory, the Republicans also retained control of the Senate and House of Representatives, granting the new administration full control over Congress.
Economic and Trade Policies
Trump is expected to implement sweeping tariffs on imports to boost domestic production and incentivize the reshoring of key industries. His administration is likely to reduce the corporate tax rate to 15%, extend individual tax cuts, and eliminate taxes on Social Security benefits. Simultaneously, Trump is expected to push for significant deregulation to lower corporate costs and regulatory burdens. These policies will have mixed effects on inflation. While tariffs could drive up prices, tax cuts and deregulation may exert downward pressure on inflation. The net impact remains uncertain.
In foreign policy, Trump plans to apply maximum pressure on Iran to prevent the country from acquiring nuclear weapons. This approach could reduce Iranian crude exports by up to 1.5 million barrels per day, with China accounting for more than 80% of those exports. To enforce this strategy, Trump may leverage the threat of increasing tariffs on Chinese imports as a bargaining tool to secure China’s cooperation.
Energy Policy and LNG
Trump’s return to the White House will bring a shift toward energy independence, marked by deregulation, faster permitting, and an end to the Biden administration’s moratorium on new LNG projects. This change will benefit developers with pending projects but could worsen the supply glut in the short term.
Trump’s push for expanding LNG exports may clash with trade tensions, particularly with China. If tariffs are reintroduced, it could reduce demand for U.S. LNG from China, complicating the growth of U.S. LNG projects. Despite this risk, the administration’s pro-energy stance could alleviate infrastructure bottlenecks, support long-term growth, and improve market sentiment, encouraging investment in the energy sector.
The Energy Transition
Under a Republican-controlled Congress, the Inflation Reduction Act (IRA) is likely to face challenges, especially its provisions supporting low-carbon energy initiatives. However, the immediate repeal of key tax credits, such as those for carbon capture (CCUS) and clean hydrogen, is unlikely, as these programs enjoy bipartisan support, particularly in Republican-led states. The 30D electric vehicle consumer credit, however, is more vulnerable to repeal.
The new administration may prioritize economic growth over climate change initiatives, focusing on cost-effective energy production and job creation. The clean energy narrative may take a backseat to economic considerations, as seen during Trump’s first term. States like California and New York are expected to maintain their clean energy policies, while the federal government may adopt a more oppositional stance toward climate-focused efforts.
U.S. Onshore Oil and Gas Activity
U.S. drilling and completion activity is projected to decline by 1% in 2025. While gas market growth will offset stagnant oil activity, efficiency improvements in drilling and well stimulation could further reduce demand for rigs and frac fleets. Trade actions, such as tariffs on materials like Oil Country Tubular Goods (OCTG) and carbon steel, could drive up costs for operators, particularly in oil and gas facilities. These increased costs could dampen activity, especially against the backdrop of a potentially softer oil market.
In conclusion, Trump’s policies, ranging from trade tariffs to energy deregulation, will have broad and far-reaching effects both domestically and internationally. As the new administration takes shape, businesses and governments around the world will need to prepare for significant changes in U.S. policy direction.
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