The incoming Donald Trump administration’s ambitious energy plans, including a 3 million barrels per oil equivalent a day (mboe/d) production boost, a potential 25% tariff on Canadian oil and gas imports, and accelerated liquified natural gas (LNG) export approvals, could reshape U.S. energy markets — but not without winners and losers.
In note to clients on Thursday, Goldman Sachs crunched the numbers on what could be seismic changes in U.S. energy markets under a Trump’s second term.
Let’s break it down: what’s realistic, what’s speculative, and who bears the cost in this evolving energy landscape.
Can The US Really Pump An Extra 3M Barrels a Day?
Trump’s vision of ramping U.S. energy production by 3mboe/d from 2025 to 2028 is ambitious but not entirely unrealistic, according to Goldman.
It can be “achievable” by 2028, provided natural gas and natural gas liquids (NGLs) are included in the mix, according to analyst Callum Bruce, CFA.
Between 2018 and 2023, U.S. energy production grew at an annual pace of 1.8mboe/d — more than double the 0.75mboe/d pace needed to hit that 3mboe/d goal. For 2025-2026, Goldman forecasts growth of 2.0mboe/d, achieving two-thirds of the target in the first two years of a possible Trump second term.
“Rising LNG demand, capital discipline, and energy prices are the key drivers behind this growth,” Bruce said. However, policy changes are expected to have limited short-term effects on production.
What A 25% Tariff On Canadian Oil Could Mean
The administration’s other attention-grabbing idea — a 25% tariff on Canadian oil imports—has raised some eyebrows.
Canada is the U.S.’s largest crude oil supplier, exporting 4.0 million barrels per day (mb/d) to the U.S. over the past year — about 25% of total U.S. refinery inputs.
Most of that oil (2.8mb/d) heads to the Midwest, where refiners rely heavily on Canadian crude.
Key players in this market include Marathon Petroleum Corporation MPC, Phillips 66 PSX, and Exxon Mobile Corp. XOM.
Goldman’s analysis suggests a 25% tariff on Canadian oil imports would hit U.S. consumers in the short term through higher gas prices at the pump. However, over time, the burden could shift.
At a later stage, Canadian producers could bear the brunt as they offer steep discounts to keep their oil flowing south. Western Canadian Select (WCS) crude, currently priced just under $60/barrel, could face a tariff-induced discount of $15/barrel to compete with U.S. alternatives.
Currently, WCS trades at just under $60 per barrel. A 25% tariff would add roughly $15 per barrel to costs, pressuring Canadian producers to cut prices and incentivizing U.S. refiners to seek cheaper alternatives.
Tariffs On Canadian Gas: Who Pays?
A 25% tariff on Canadian natural gas would tell a slightly different story.
Canadian gas exports to the U.S. average 5-6 billion cubic feet per day (Bcf/d), accounting for 5% of U.S. supply. A 25% tariff on these imports would likely squeeze Canadian producers in the short term,
According to Goldman Sachs, a 25% tariff could slash U.S. imports by approximately 200 million cubic feet per day, based on current price differentials.
Goldman projects that, in the short term, Canadian producers would shoulder most of the tariff burden due to oversupply and low prices. But tighter U.S. gas balances from 2026 onward — driven by higher LNG exports — could allow more of the cost to be passed on to American consumers.
“Canadian gas producers would likely bear the bulk of the burden until U.S. balances tighten from 2026,” he said.
LNG Exports: Speeding Up Approvals Won’t Move the Needle (Yet)
The report is skeptical that accelerating U.S. Department of Energy (DoE) approvals for LNG export projects will have any material impact on global or domestic gas balances before 2027.
“DOE approval is necessary, but not sufficient, for new LNG projects to move forward,” Bruce said. Long-term capacity contracts and the time-intensive construction process remain the bigger hurdles.
That said, U.S. LNG exports are still on track to more than double by 2030, reaching 25 Bcf/d and increasing the U.S.’s global market share from 22% to 31%.
Bottom Line: Winners And Losers
Goldman’s analysis offers a clear takeaway: while the energy boom may lift U.S. production, tariffs and policy changes could ripple through markets in ways that aren’t always predictable.
Trump’s proposed energy policies could reshape North American energy markets, but the impact varies depending on the player:
- U.S. Consumers: Likely to face higher gas prices in the short term if Canadian tariffs are imposed.
- Canadian Producers: Under pressure from lower prices for both oil and natural gas.
- U.S. Producers: Positioned to capitalize on higher domestic production targets and rising LNG exports.
- Midwest Refiners: Will face margin pressure but may offset costs by negotiating deeper discounts on Canadian crude.
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