Energy Gang Podcast Summary

Episode: What do President Trump’s Tariffs Mean for Energy? | The View from Washington and Canada
Date: February 18, 2025
Host: Ed Crooks (Vice-Chairman, Wood Mackenzie)
Guests:

• Samantha Gross (Director of Energy Security and Climate Initiative, Brookings Institution)
• Joseph Majkut (Director of Energy Security and Climate Change Program, CSIS)
• Andrew Leach (Energy Economist, University of Alberta)

Episode Overview

This episode dives into the implications of President Trump’s surge of new tariffs—actual, threatened, and delayed—and what they mean for the energy sector in the US and Canada. The panel explores how these tariffs differ from those of the Biden administration, the evolving relationship between the US and Canada, the risks to supply chains and energy security, and the broader consequences for the global energy transition and climate policy.

Key Discussion Points

1. The Rationale and Style of Trump’s Tariffs

• Tariff Proliferation: President Trump’s second administration has moved aggressively with tariffs targeting Colombia (in response to deportation flight refusals), Mexico and Canada (over border security), China (including a 10% tariff and tit-for-tat retaliation), and global steel and aluminum.
• Underlying Motives: Trump frames tariffs as a tool for "hegemony and dominance" (Samantha Gross, 03:58), as well as addressing trade deficits—even though most economists dismiss country-level trade deficits as significant problems.
• Bipartisan Shift: Both Trump and Biden have used tariffs as tools, but Biden’s were more targeted, aiming to foster domestic industries like solar panels and EVs, while Trump’s are broader—viewed as a method of revenue and as leverage for various policy concessions (Joseph Majkut, 04:56, 09:01).

Quote (Samantha Gross, 03:58):
"He sees this as a way to, I think, get back at countries that he thinks have done us dirty. He's concerned about trade deficits for whatever reason... but that's not how he sees it."

2. Congressional Power and Political Shifts

• Congressional vs. Presidential Authority: Although Congress technically holds tariff powers, it has effectively ceded much of this authority to the President, with little sign of pushback despite the drastic expansion under both Biden and Trump.
• Tariffs as Industrial Policy: Biden’s tariffs were about targeted industrial development, whereas Trump's are seen as a "much broader tool" and potential "revenue source" (Samantha Gross, 09:01).

3. Canadian Perspective & Energy Dependencies

• Canadian Shockwaves: In Canada, Trump's unpredictable tariffs (especially on aluminum, steel, and possibly energy) have created deep economic uncertainty and a sense of vulnerability (Andrew Leach, 10:16).
• Energy Integration: The US and Canadian energy sectors are highly interdependent, especially in refined products and pipeline flows (e.g., Line 5). Tariffs threaten both sides, potentially disrupting entire regional supply chains in the US Midwest and Canadian oil sands (13:09).

Quote (Andrew Leach, 13:09):
"There is this feeling of maybe less partnership... Now you amplify that with. With the president coming out and saying, you know, explicitly, we don't need their oil, we don't need their resources. And that's not true..."

4. Supply Chain Complexity and Risks

• Mutual Vulnerability: The supply chains are so tightly integrated that "supply chains [could] shut down within days" if tariffs are imposed, jeopardizing both US refineries and Canadian producers (Andrew Leach, 23:38).
• Economic Backfire: Inland US refineries and Midwest regions would feel higher costs, which is at odds with the administration’s stated aim of cheap, abundant energy (Ed Crooks, 20:14).
• Second-Order Effects: Broad tariffs risk creating unanticipated bottlenecks, raising energy infrastructure costs and potentially stalling grid modernization and AI/data center expansions.

Quote (Samantha Gross, 29:29):
"We have some goals from the Trump administration that are at cross purposes... there are goals that are difficult to achieve at the same time."

5. Tariffs vs. Energy Transition & Innovation

• Tariffs as Political Economy Tool: Panelists acknowledge some political rationale for tariffs (building domestic support for the energy transition), but warn that they may breed complacency and undermine true global competitiveness (Samantha Gross, 32:32).
• Global Innovation Race: The US is lagging behind China in clean tech manufacturing (e.g. EVs, batteries, solar), but retains innovation advantages in areas like carbon capture, nuclear, and geothermal (Samantha Gross, 34:13 and 38:18).
• The Resource vs. Manufacturing Difference: Canada’s resource advantage is fixed, while manufacturing can be anywhere; this is a crucial shift for resource-dependent economies like Canada (Andrew Leach, 35:06).

Quote (Samantha Gross, 32:32):
"It sort of ring fences the US Market and says you can have that. And I worry about US industries... sort of getting fat, dumb and happy and tariff protected."

6. Tariffs & Global Cooperation on Climate

• Risk of Balkanization: Economic nationalism and trade barriers threaten the global fight against climate change by slowing technology transfer, reducing efficiency, and eroding political trust. Joint international action may falter (Samantha Gross, 46:04).
• Alternative Approaches: Joseph Majkut argues that the UN’s cooperative model (COPs) has underperformed and that "coercive" measures—like climate clubs and carbon-based border adjustments—may be more practically effective if major markets commit (48:06).
• Canada’s Hedging: Canada is rapidly revisiting the viability of new export markets, pipelines, and regulatory reforms to avoid over-reliance on the US (Andrew Leach, 41:16).

Quote (Samantha Gross, 46:04):
"This situation where countries are becoming less economically cooperative is rotten for the climate. It almost certainly raises prices and that's the kind of thing that slows the transition."

Notable Quotes & Memorable Moments

• On Energy Security & Misunderstanding:

  "Even though we're the world's largest oil producer today, the Canadian oil is a better fit for our refineries than what we're producing so much of here. It's not hard to understand, but it's poorly understood in the political discussions here."
  — Samantha Gross, 18:58

• On Complex Supply Chains:

  "People might know who their own suppliers are, but they don't know who the suppliers of the suppliers are... People are trying to get much better informed about all that stuff..."
  — Ed Crooks, 40:37

• On the Energy Innovation Race:

  "Maybe we have lost the race for the current technology of solar panels and the current technology of batteries. But we have some of the world's finest universities, national labs... The US is a great place to innovate. We just have to want to do it and not sort of cede the future to China."
  — Samantha Gross, 34:13

• On Political Feedback:

  "We don't know exactly how some of these tariffs will land, so we don't know who will be paying them. But it's very likely that they will have consumer impact. And the question is will they have enough consumer impact to make a difference in sentiment here in the United States and if they do, where Will the blame fall?"
  — Samantha Gross, 44:03

Timestamps for Key Segments

• Tariff Overview & Motives: 00:56 – 04:55
• Comparing Biden & Trump Tariffs: 06:50 – 10:07
• Canada’s View & Energy Integration: 10:07 – 14:54
• Supply Chain/Mutual Dependency: 16:58 – 24:57
• Regional Economic Impact: 20:14 – 21:05
• Second-Order Supply Chain Risks: 27:32 – 31:36
• Innovation, Manufacturing & Resources: 34:13 – 38:52
• Pipeline and Export Policy Shifts: 41:16 – 44:03
• Tariffs, Globalization & Climate Policy Implications: 46:04 – 52:22

Conclusions & Forward-Looking Perspectives

• Uncertainty Dominates: Rapidly unfolding US tariff policy is creating major uncertainties for energy markets, especially regarding Canada-US integration.
• Tariffs are Double-Edged Swords: While politically attractive, tariffs risk raising costs, stalling domestic goals, and undermining both supply chains and international climate cooperation.
• Canada’s Strategic Dilemma: Canada is being forced to accelerate conversations on market diversification and energy infrastructure in response to volatile US policy.
• Climate Cooperation at Risk: Experts warn that a balkanized economic order slows transition efforts, though some argue for a pragmatic "climate club"/carbon border approach over global consensus-building.
• Innovation is Still Key: The US still holds significant innovation potential, but risks ceding dominance if protectionism stifles competitiveness and openness to new technologies.

Closing Thoughts

The episode closes on a reflective note: extreme policy shifts are changing the rules for energy, trade, and climate. As one panelist put it, “the old world has died, but the new is struggling to be born.” The big question: can North American energy and climate leaders find new ways to cooperate and compete to accelerate the energy transition under these turbulent circumstances?

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