Will Tariffs Increase Energy Demand?

April 18, 2025 

In light of the current economic landscape and ongoing global tariffs, we interviewed Ronnie Chahal, Director, Pricing and Forecasting Solutions who said a bullish case can be made for energy.

The Reshoring Debate

Tariffs make the import of goods more expensive, prompting companies to consider reshoring of manufacturing operations. By bringing production back home, businesses can avoid these additional costs, mitigate supply chain risks, and take advantage of government incentives aimed at boosting local production.

Steel, aluminum, electronics, automotive, and textiles are among the industries most affected by tariffs. As these industries move towards reshoring, we can expect a significant increase in energy consumption. Domestic production facilities require substantial energy to operate, which will likely drive up demand for energy resources. This trend underscores the need for energy providers and end-users to prepare for higher consumption levels and ensure a stable supply.

Future Adjustments in the Energy Market and Strategic Steps for Energy Providers

The energy market may not yet reflect the anticipated rise in demand due to economic uncertainties and the time lag between reshoring decisions, changes in supply chain, and actual production increases. Additionally, a global economic slowdown adds another layer of complexity. However, this period presents a unique opportunity for businesses to secure energy at more favorable rates before demand spikes.

Looking ahead, if the reshoring trend continues, the energy market may see increased demand, leading to higher prices and the need for expanded infrastructure.