What Trump’s Tariffs Could Mean for UK Energy Prices

President Trump’s latest tariff package, announced in April 2025, has triggered significant uncertainty across global markets - and the energy sector is no exception. While the UK isn’t directly affected by these new trade measures, the knock-on effects are likely to be felt here, particularly when it comes to energy prices and investor confidence.

The tariff plan introduces a sweeping 10% levy on most imports into the United States, with higher rates for certain economies. However, notably, large parts of the fossil fuel sector have been excluded - including crude oil, liquefied natural gas (LNG), and some petrochemical materials. The carveout has raised eyebrows, particularly given the financial support Trump’s campaign has received from major oil and gas donors.

Industry lobby groups have welcomed the exemption, praising the administration for recognising the “complexity” of energy markets. But many critics have pointed to the political motivations behind the move, suggesting the decision prioritises donor interests over broader economic fairness or climate goals.

Despite the exemption, markets haven’t responded favourably. Since the announcement, U.S. oil prices have tumbled - briefly dropping below $60 a barrel, the lowest level seen in nearly four years. Analysts point to concerns that global economic growth could slow as a result of the tariffs, weakening demand for energy.

At the same time, OPEC and its partners have announced plans to increase oil production - adding further downward pressure on prices. For now, that may translate into cheaper wholesale energy costs, but the wider picture is less reassuring.

Why This Matters for the UK

Even though the UK isn’t directly caught in the tariff crossfire, we’re not immune to its consequences. There are a few reasons why UK energy businesses - and consumers - should be paying attention:

1. Price Volatility

A sharp drop in oil prices may seem like good news for businesses and households, but extreme market swings make long-term planning more difficult. Investors may pull back from funding new infrastructure or clean energy projects if they’re uncertain about the future price landscape.

2. Higher Costs for Infrastructure

The tariffs include raw materials like steel and aluminium - which are essential for building everything from pipelines to wind turbines. Any rise in costs for these materials could affect projects in the UK, especially those that rely on imports from the U.S. or countries also facing tariffs.

3. Global Investment Caution

The political nature of the tariff exemptions — particularly the favour shown to the fossil fuel industry - may further shake investor confidence. We could see a slowdown in funding for large-scale energy projects globally, including those that contribute to the UK’s net zero targets.

4. Supply Chain Disruption

The UK’s energy sector is deeply connected to global supply chains. Disruption in one part of the world - whether it’s oil production, materials manufacturing, or financing - often filters through elsewhere. Rising costs or delays in one area can quickly affect project timelines and budgets at home.

Where We Go from Here

The full impact of Trump’s tariffs is still unfolding, but there’s little doubt they’ll introduce new layers of complexity into the already dynamic global energy market. For UK businesses, the focus should be on:

• Keeping a close eye on commodity markets

• Reviewing procurement strategies, especially for major infrastructure projects

• Strengthening ties with regional partners outside of the U.S.

• Remaining flexible in investment and development planning

Energy is always deeply connected to geopolitics, and this latest development from the U.S. is a reminder of just how interconnected the system really is. While there may be short-term cost benefits from falling oil prices, the wider economic and political context points to a period of increased uncertainty.

For those navigating the UK energy landscape - whether you're managing budgets, building infrastructure, or planning for net zero - staying agile and informed will be key.