Publications: Notes at the Margin

The Curse of Strong US Energy Exports (December 8, 2025)

 

Donald Trump emphasized three key goals for his new administration during his 2024 election campaign:

• Rebuilding US manufacturing
• Making the US an energy superpower
• Bringing down US consumer energy costs

The data make clear that these three goals are in conflict. The United States cannot rebuild its manufacturing base and remain an energy superpower. It will take lower energy prices to expand the manufacturing base. While lower prices would benefit consumers—a key Trump goal—they would also depress energy production.

 

The data and numerous economic studies make it clear that strong US energy exports have undermined and will continue to undermine efforts to boost US manufacturing. Experience shows that it will take gasoline prices in the $3 to $5 per gallon range for the United States to stay a competitive exporter. The goals of rebuilding US manufacturing and bringing oil prices down are, then, incompatible with the United States remaining an energy superpower.

 

An obscure economic identity[i] and the foreign exchange market prevent the United States from achieving all three Trump goals because the US is a high-cost energy producer. Manufacturing exports must decline in the current economic environment when energy exports increase because high energy prices are what propel growth in US energy production. The decrease in manufacturing exports must offset the expansion in energy exports spurred by high prices because rising energy prices lead to a stronger dollar. History and data show that a strong dollar invariably leads to a decline in US exports. Thus, the manufacturing sector will be harmed by a rising dollar in a high-oil-and-gas-pricing world with increasing energy exports. US competitiveness will be undermined.

 

Here, we explain that the pursuit of “energy dominance” will doom the rebuilding of US manufacturing. It will also likely reduce oil and natural gas consumption in the United States.

 

These are the consequences of the administration’s incompatible economic goals.

 

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