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May's Horizons sets out three tariff scenarios and the implications for oil, gas & LNG, power and metals.
The Trump administration's ‘Liberation Day’ tariff announcement on 2 April was arguably the most pivotal moment for the world economy since China’s 2001 entry into the World Trade Organization.
Despite progress in US-China talks, the threat of a global trade war remains. Such an outcome would do significant damage to the world economy, fuelling supply chain inflation and slower growth, likely resulting in a global recession. Even if an all-out trade war is averted, the impacts of higher tariffs on economic growth, energy demand and production costs will be complex and far reaching.
Uncertain times require planning for divergent outcomes. Wood Mackenzie has developed three distinct scenarios that consider the potential implications for four sectors: oil, gas & LNG, power & renewables and metals & mining.
May's Horizons report, Trading cases: Tariff scenarios outlines the the impacts of different possible outcomes on global GDP, industrial production, and commodity supply, demand and prices out to 2030.
Key themes include:
- Trade truce – low tariffs. Our most optimistic scenario assumes a reversal of the current US tariff policy, with trade barriers quickly returning to 2024 levels.
- Trade tensions – 10% tariffs. Our second scenario currently looks like the most probable outcome. Global tariff barriers increase, but an all-out trade war is avoided.
- Trade war – 30%-plus tariffs. Under this scenario, the US implements the tariffs announced on 2 April in full, with trading partners retaliating. The US effective tariff rate quickly exceeds 30% causing maximal supply-chain disruption.
Read the full report now to get the complete picture. Then, watch the replay of Horizons Live below, where our expert panel debated some of the key themes and answer your questions in a live Q&A.
The panel:
- Gavin Thompson,Vice Chairman, Energy – Europe, Middle East & Africa
- Massimo Di Odoardo, Vice President, Gas and LNG Research
- Ryan Sweezey, Director, North America Power & Renewables
- Ann-Louise Hittle, Vice President, Oil Markets
- James Whiteside, Head of Corporate, Metals & Mining
- Peter Martin, Head of Economics, Macroeconomics
Watch the live replay below
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