President Trump’s tariff strategy in his second term has touched almost every corner of the economy, but few sectors have felt the effects as unevenly as oil and gas. The administration has chosen not to apply tariffs to crude oil, natural gas, or refined fuel imports—yet upstream, midstream, and refining companies are still dealing with higher costs from steel, aluminum, and other essential materials. The disconnect means that the feedstock remains tariff-free, while the infrastructure needed to produce and process it is becoming more expensive.
Equipment Costs and Supply Chains: The Pressure is Upstream and Midstream
The most immediate pain point is cost inflation on equipment and materials. The current tariff package includes:
A 25% tariff on most goods from Canada and MexicoA 10% tariff on Chinese importsExpanded duties on steel and aluminum
For an industry that sources everything from line pipe to control systems globally, these tariffs show up quickly. Steel is the biggest factor. Drill pipe, casing, gathering lines, transmission lines, LNG tanks, refinery vessels, structural steel—almost every piece of hard infrastructure depends on it.
Offshore Magazine reported that these tariffs are expected to add 2–5% to offshore project costs, contributing to a growing list of operators delaying or renegotiating capital plans. Ernst & Young reached a similar conclusion, noting that even with strong political support for domestic drilling, steel tariffs continue to introduce planning risk, especially for multi-year projects and deepwater developments.
Chinese tariffs affect a different layer of the supply chain: electrical gear, valves, sensors, sub-sea electronics, and even the AI-enabled drilling controls now common in shale operations. When operators are budgeting tightly, a few percentage points of cost inflation can move a drilling program from “marginal” to “uneconomical.”
Crude Oil Imports: Explicitly Exempt
Unlike equipment and materials, crude oil, LNG, NGLs, gasoline, diesel, and other refined products were formally excluded from the new tariff structure. Energy Connects and Reuters confirmed in April 2025 that the White House exempted crude and fuel imports from the 10% baseline tariff and from the higher partner-specific tariffs.
The reasoning is straightforward:
Refineries depend on imported crude. Gulf Coast refineries were built to run medium and heavy crudes which isn’t a great match for domestic shale. Taxing imported crude would upend refinery economics and reduce throughput.Fuel prices are politically sensitive. A crude import tariff would show up at the pump within days, and no administration wants to explain a sudden 20–40 cent jump in gasoline during an election year.
Targeted measures do exist—most notably a 25% tariff on Russian oil tied to broader sanctions—but these are narrow and geopolitical in nature, not part of a broad policy shift.
The Refinery Consequences If Crude Oil Is Tariffed
It’s worth considering the counterfactual, because the industry understands exactly how disruptive a crude tariff would be.
Gulf Coast refineries would take the biggest hit.
Texas and Louisiana host the world’s largest concentration of complex refineries designed for heavy blends—traditionally sourced from Latin America, Canada, and the Middle East. A 10–25% tariff on those barrels would:
Raise feedstock costs immediatelyPush some refineries to run at lower utilizationNarrow or even erase refining margins on heavy crude slates
Even a 10% tariff could wipe out profitability for plants optimized for discounted foreign grades.
U.S. fuel prices would rise sharply.
Since imported crude makes up a meaningful share of refinery inputs, a tariff would move through the system quickly:
Higher crude costs lead to higher wholesale product costsHigher wholesale costs lead to higher pump prices
Gasoline could rise anywhere from 10 to 40 cents per gallon, depending on the tariff level and the mix of crudes affected.
Exports would fall, and the U.S. could lose market share.
The U.S. is one of the world’s largest exporters of refined products. A crude tariff would raise the cost of production, making American gasoline, diesel, and jet fuel less competitive in Latin America and Europe.
It could unintentionally raise global oil prices.
If U.S. imports fell because tariffs distorted economics, producers elsewhere would shift barrels to other buyers at higher prices. The global market would tighten, and Brent could drift upward.
Refinery closures could result.
Several refineries have shut down over the past decade. A tariff-driven margin squeeze could accelerate that trend, especially for older Gulf Coast or East Coast plants.
This is precisely why both the first and second Trump administrations have avoided taxing crude imports: doing so would disrupt refinery operations, raise fuel prices, and undermine the U.S. energy advantage.
Strategic Implications for 2025–2026
Even without crude tariffs, the tariff environment has impacted U.S. oil and gas:
Project timelines are slipping as operators re-price materials.Break-evens are creeping up, especially in shale plays that rely on imported steel.Retaliatory tariffs from Canada and Mexico add friction to supply chains for valves, pumps, and assembled equipment.Refiners remain stable for now, but only because crude imports were spared.
If the administration ever decides to revisit the crude exemption, the consequences would be immediate and far-reaching.
Conclusion: A Policy That Spares Oil but Strains the System
Trump’s tariff policy has created a strange split in the energy economy. On one hand, the administration has deliberately shielded crude oil and refined product imports from new duties, preserving the supply chains that keep U.S. refineries competitive and fuel markets relatively stable. On the other hand, the same tariff regime has raised the cost of building and maintaining the very infrastructure that keeps the system running. Higher steel prices, equipment delays, and shifting procurement strategies are all reshaping upstream and midstream investment patterns.
The result is an industry absorbing indirect blows even as its core feedstock remains untouched. And if crude oil is ever added to the tariff schedule, the pressure would shift dramatically. Refiners—especially complex Gulf Coast facilities built to process heavier foreign grades—would face higher costs, narrower margins, and operational constraints that would ripple through gasoline and diesel markets. It is an outcome policymakers have so far avoided for good reason.
For now, the message is clear: tariffs may not touch the barrel, but they touch almost everything around it. The age-old question remains whether the industry can continue to adapt faster than the policy landscape shifts beneath it.
By Robert Rapier
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