Publications: Notes at the Margin

Energy Capitulation: Trump Tariffs Threaten US Oil Refiners and Producers (March 10, 2025)

 

President Donald Trump has repeatedly advocated “Energy Domination” for the United States. His trade policies, which emphasize tariffs, will lead to “Energy Capitulation.” US Gulf Coast refiners are being threatened by the potential import retaliations from nations hit with higher US duties. Our domestic crude oil producers are also in danger.

 

This story of disastrous government intervention is not new. The United States once dominated world soybean production. Then, in 1973, the Nixon administration imposed a brief embargo on soybean exports to slow inflation. Japan, one of our major buyers, responded by investing in soybean production in Brazil. Today, that country is the world’s largest producer and exporter. US farmers may have lost more than a trillion dollars over fifty-two years thanks to Nixon’s short-sighted move.

 

Tariffs imposed in 2025 by the United States will have a similar impact on the domestic oil industry. Gulf Coast refiners that rely on exporting substantial amounts of their gasoline and diesel production will be forced to cut runs. They may eventually have to shutter more than two million barrels per day of refining capacity.

 

Last week, US Treasury Secretary Scott Bessent called outgoing Canadian prime minister Justin Trudeau a “numbskull” for hitting back against US tariffs.[i] Bessent should look in the mirror to see the real numbskull. Again, the US tariff policy has converted Donald Trump’s goal of US energy dominance into energy capitulation.

 

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