Global Trade Turbulence: How Tariffs Are Reshaping Energy, Economy, And Investment Outlook – Wood Mackenzie

The global economic landscape is facing a new wave of uncertainty following the United States’ “Liberation Day” tariff announcement in April. These sweeping tariffs, which echo the magnitude of China’s WTO accession in 2001, threaten to reshape global trade dynamics and have already prompted retaliatory measures from multiple countries. Unlike the past decades of increasing globalization, these policies suggest a trend toward deglobalization. The changing nature of trade relations, combined with policy unpredictability and temporary tariff reductions, has made it increasingly difficult to assess long-term impacts.

The tariffs are expected to slow economic growth, impacting demand, pricing, and investment across sectors like oil, gas, LNG, renewables, and metals. To navigate these turbulent conditions, Wood Mackenzie has developed three scenarios to assess potential outcomes through 2030. The scenarios include a “trade truce,” representing an optimistic rollback of tariffs; “trade tensions,” with a steady increase in tariffs to around 10%; and a full-blown “trade war,” involving tariffs exceeding 30% and resulting in a global recession.

Under the trade truce scenario, global GDP continues to grow at an annual rate of 2.7%, oil demand rises by 4.4 million barrels per day, and Brent crude prices average $74 per barrel by 2030. Liquids production also sees healthy growth. In the case of trade tensions, global growth slows, oil demand increases more modestly, and Brent prices average around $68 per barrel. The trade war scenario presents the most damage, with oil demand falling in 2026 and Brent prices dropping to $50 per barrel, severely impacting upstream investment and production.

Gas and LNG markets are affected differently. A trade truce maintains market tightness until 2025, with LNG prices gradually falling as supply increases. Trade tensions ease the pressure but still result in a rebalancing at lower prices. A trade war significantly disrupts LNG flows, particularly for U.S. exports to China, and leads to widespread market oversupply. Despite reduced demand, Henry Hub gas prices remain strong due to lowered associated gas production.

The power sector is caught between reduced demand from slower economic activity and rising needs from data centers and manufacturing policies. Tariffs increase costs and create uncertainties that hinder investment. In a trade war, battery storage, particularly in the U.S., is hit the hardest due to dependence on Chinese components. Cost premiums for renewables also increase, weakening U.S. competitiveness and progress in clean energy adoption.

Metals and mining also face stark consequences. Tariffs on steel and aluminium are manageable under the trade truce, but in the trade tensions scenario, reduced industrial activity slows copper and aluminium demand. A trade war leads to steep declines across all major metals, erasing projected growth through 2026. This is particularly concerning for energy transition sectors, as investment in critical mineral supply may fall short of future demand.

Although U.S.-China trade talks have made some progress, the risk of a trade war persists. Any sustained elevation in tariffs would have long-lasting effects on economic performance, supply chains, energy markets, and climate goals. Businesses in affected sectors must adapt quickly, balancing caution with strategic flexibility. National policy responses may prioritize economic and energy security over global environmental cooperation. As the global order shifts, the implications are profound and uncertain. Strategic planning backed by timely, accurate data is crucial for navigating this evolving terrain.