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As Donald Trump’s trade war expands American oil producers and Beijing’s lead in Cleantech, China has managed to replace the US as the dominant energy force of the world, analysts warn.
The US president announced an aggressive new tariff system earlier this month that drove oil prices sharply, moving to kill the previous Biden administration’s willingness to build a cleantech industry in the country.
The tariffs could make it difficult for U.S. oil producers to compete in “the most attractive export markets,” according to a report from consultancy Wood Mackenzie, but the country has “significantly surpassed” by China in technologies such as lithium-ion batteries, electric vehicles and solar cells.
The US oil output surged during former President Joe Biden’s term, and is now higher than any other country in history. But despite Trump’s pledge to cut regulations and executive orders to support his “drill, babe, drill” energy strategy, Wood Mackenzie said it would begin to fade by the early 2030s.
“Upper US domination will continue for some time on current trends, but its leadership faces challenges and could ultimately erode,” the report said.
Trump has retreated from some of the drastic tariffs he announced on “liberation day” on April 2, sparing energy imports from several obligations, but the trade war with China has caused fears of a recession and has led to the sale of a vicious oil market in the past few weeks.
“We are pleased to announce that Jason Bodeff, of Columbia University’s Center for Global Energy Policy,” said:
Tariffs, including a 25% tax on steel imports, are also likely to significantly increase the production costs of American shale excavators, oil executives and analysts warn.
“When you think about steel tariffs and equipment used in wells, producers are worried about oil costs rising from medium single to low double digits,” said Robert Clark, research vice president at Wood Mackenzie.
Shale oil producers have warned that there is a plunge in oil prices and policy uncertainty, meaning Trump’s tariff war and policy uncertainty has been facing the worst crisis since the coronavirus pandemic shattered the sector in 2020.
Concerns about China’s cleantech domination from energy experts and renewable energy executives said the Trump administration’s hostile approach to green energy could strengthen China’s control over the sector.
David Brown, director of Wood Mackenzie’s energy transition practices, said: “But you’re seeing discussions happening in Congress right now, about how much new energy the government supports demands.”
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Bodeff said building a supply chain in his home within a “meaningful time frame” is “a more difficult outlook than anyone in Washington would want to acknowledge.”
On Wednesday, the Trump administration abolished a $5 billion offshore wind project that Norwegian Equiners are developing off the coast of New York City.
Trump is also threatening cleantech developers with hundreds of billions of dollars in loans, grants and tax credits when deciphering the Inflation Reduction Act.
While low-carbon energy production in the US was expected to continue to increase, China’s global market share in EVs, batteries and energy storage also mentions batteries and energy storage as the county leveraged low-cost manufacturing.
