The tariff measures pushed forward by US President Donald Trump are reshaping the global energy landscape, and Europe finds itself among the most exposed regions. That was the central message delivered by Wood Mackenzie analysts during the 8 April webinar What Trump’s tariff policy means for energy and natural resources. Just one day later, the US government announced a tariff hike to 125% on Chinese goods, confirming the risks highlighted by experts: an escalating trade war with immediate and long-term effects across energy supply chains.

Peter Martin, Head of Economics at Wood Mackenzie, was blunt: “If these tariffs remain in place, it’s really hard to see how the US economy avoids a recession.” His outlook foresees a potential one-percentage-point hit to US GDP this year and zero growth in 2026. The global uncertainty is heightened by additional measures such as a 20% tariff on EU goods and a universal 10% tariff on nearly all imports, with temporary exemptions for some nations.

For Europe—heavily reliant on imported energy technologies and critical metals—these measures present a clear and immediate threat to its energy transition plans.

Renewables under pressure: battery prices may rise by up to 25%

Chris Seiple, Vice Chair for Energy Transition, warned of deepening supply chain disruptions: “The new tariffs are increasing the cost of every major piece of equipment.” According to Benjamin Boucher, Senior Analyst, tariffs on Chinese lithium-ion batteries—of which the US imported over 89% in 2024—could lead to a 25% rise in prices.

“These tariffs are shaking both supply and project planning at utility scale,” Boucher stated. Moreover, 80% of the large-scale power transformers used in the US are imported, raising serious concerns for grid infrastructure. “Achieving self-sufficiency in transformer production will take decades and billions in investment,” he added.

Europe, with similarly high import dependence on energy components, faces direct consequences across procurement, budgeting and project timelines.

European utilities reassess sourcing and risk exposure

Isabel Schwartz, Vice President of Supply Chain Consulting, explained that utilities are already forming task forces to assess exposure and respond quickly. “Suppliers are already passing tariff costs on to utilities, even under existing contracts,” she warned.

Schwartz advised that firms should revisit material sourcing, contract terms, and risk hotspots to mitigate unexpected increases on ongoing and upcoming projects—particularly those aligned with decarbonisation targets and funding schedules.

Gas markets: rising costs and infrastructure bottlenecks

Massimo Di Odoardo, Vice President of Gas and LNG Research, highlighted how tariffs affect the cost structure of new LNG infrastructure in the US. “We’ve already seen the cost of building new LNG rise from $600 to over $1,000 per tonne. The tariffs add a further 5%,” he explained.

For Europe—dependent on US LNG as a key alternative to Russian gas—this trend may undermine the expansion of future export capacity. “If project costs continue to rise, final investment decisions may be delayed, and that has downstream implications for long-term supply availability,” Di Odoardo cautioned.

Oil and metals: volatile markets and strategic uncertainty

On oil markets, Ann-Louise Hittle, Vice President of Oil Markets, projected a decline of up to one million barrels per day in global demand by 2026 under current tariff scenarios. This could result in a $7-per-barrel drop in Brent prices.

Turning to metals, Anthony Knutson from the Metals and Mining Research team pointed out that while some critical raw materials were exempt, the reimposed steel and aluminium tariffs have driven US prices up by $300 per tonne. “The US and Europe remain structurally dependent on imports for energy-intensive industrial materials,” he stressed.

A new barrier to Europe’s energy transition

Across all sectors, Wood Mackenzie’s experts agreed: the US tariff strategy introduces a structural shock to the global energy economy. “Europe must prepare for an environment of higher costs, logistical tension and the need for new strategic partnerships,” Seiple concluded.

With disrupted markets, delayed investment decisions, and aggressive climate targets on the line, Europe’s energy supply chain is under direct pressure from an unpredictable and confrontational US trade policy.