Trump tariffs may already be impacting the offshore oil and gas industry

Canada supplies 16% of US OCTG imports, and Mexico contributes to broader steel and equipment flows. The 25% tariff on Canadian and Mexican goods (with energy at 10%) disrupts this integrated North American supply chain, built under NAFTA and the USMCA. Offshore service firms that source steel-intensive components now face higher input costs or delays if they pivot to domestic suppliers with limited capacity. Comments from industry observers in March seem to echo this, noting a 25% immediate cost increase for casing and tubing, with warnings of reduced drilling activity.

Meanwhile, the 10% tariff on Chinese imports hits equipment like valves, fittings and subsea hardware, where China is a key low-cost supplier. Goldman Sachs suggests these tariffs won’t drastically shift global oil prices short-term, but they do burden US refiners and offshore operators reliant on imported intermediates.

Industry response and production trends

Despite rising cost pressures, production in the US GoM is holding steady, with the US EIA forecasting 1.9 million bbl/d in 2025, up from 1.8 million in 2024, driven by new fields like Whale and Winterfell. The president’s “drill, baby, drill” mantra, bolstered by a few deregulatory moves, is aiming to offset tariff costs with higher output. However, smaller operators may scale back if steel and equipment costs erode profitability, especially in marginal fields. Larger Gulf players that have tied back new fields to existing platforms are better positioned to weather this, leveraging economies of scale.

Bottom line

For producers in the US GoM, Trump’s tariffs are, at the very least, adding uncertainty to an industry already navigating Biden-era leasing limits, pandemic-induced supply chain disruptions and a global energy transition.

The tariffs are expected to add 2-5% to overall project expenses in the US GoM, the result of higher steel and equipment costs, modest fuel price risks, and supply chain friction.

The US GoM’s breakeven price of $47/bbl (down from $68 in 2014) keeps it competitive, but prolonged trade friction could dampen investment appetite. Production growth is expected to continue, but smaller firms might pull back if the trade wars escalate, and long-term investment could soften.

Still, the resilience of E&P programs in the US Gulf — as shown by production levels, which have been growing and are expected to continue to climb — suggests adaptation rather than downturn.