U.S. Tariffs to Trigger Higher Costs and Project Delays Across the Oil and Gas Sector

October 29, 2025 — Sweeping new U.S. tariffs on metals and critical materials are expected to raise costs, delay key oil and gas projects, and disrupt supply chains in 2026, according to a new Deloitte report released Wednesday.

The study warns that President Donald Trump’s broad trade measures, including steep duties on steel, aluminum, copper, and crude feedstocks, could significantly alter the U.S. energy industry’s cost structure and weaken investment confidence heading into 2026.

---

Tariffs to Hit Energy Supply Chains and Capital Projects

The oil and gas industry depends heavily on globally sourced materials and specialized equipment, from drilling rigs and valves to compressors and high-grade steel. With new tariffs raising input costs by 4% to 40%, Deloitte predicts profit margins across the value chain will face heavy compression.

“These measures could create significant inflationary pressures, forcing operators to revisit project economics and delay investment timelines,” the report noted.

The United States currently sources nearly 40% of oil country tubular goods (OCTG) from foreign suppliers, leaving operators particularly exposed to import duties.

---

Inflation and Investment Risks: $50 Billion in Projects at Stake

The report estimates that the combination of higher material costs, financing uncertainty, and tariff-related inflation could delay more than $50 billion worth of offshore and greenfield projects until late 2026 or beyond.

“Final Investment Decisions (FIDs) could be postponed as companies reassess returns under the new cost regime,” Deloitte said. “Many projects that were marginally profitable under previous cost assumptions may now struggle to proceed.”

To manage the new risk environment, analysts expect oil and gas firms to renegotiate supplier contracts, adding escalation and force majeure clauses to share inflation risks and mitigate volatility.

---

Shift Toward Domestic and Non-Tariffed Suppliers

Facing prolonged trade disruptions, many U.S. energy producers are expected to prioritize supply chain resilience over cost efficiency. Deloitte predicts a strategic pivot toward domestic sourcing, non-tariffed suppliers, and the use of foreign trade zones or tariff reclassification strategies to manage import costs.

“This marks a major shift in procurement philosophy,” the report said. “The industry’s dependence on foreign inputs for critical infrastructure components will be tested in 2026.”

---

Broader Economic Implications for the Energy Sector

U.S. tariffs currently include 10%–25% duties on crude feedstocks not covered under the United States-Mexico-Canada Agreement (USMCA), and 50% tariffs on steel, aluminum, and copper. These measures will ripple through the oilfield services, refining, and midstream logistics sectors, raising capital expenditure requirements and potentially constraining supply.

Analysts warn that smaller independent producers will face the greatest financial strain, as they have less ability to absorb or hedge against cost spikes compared to integrated majors like ExxonMobil, Chevron, and ConocoPhillips.

---

Long-Term Outlook: Balancing Resilience and Competitiveness

While the near-term impact appears negative, Deloitte highlights that the tariff-driven disruption could accelerate efforts to onshore manufacturing, diversify supply sources, and strengthen domestic industrial capacity — trends that may improve U.S. energy security over time.

Still, the consultancy cautions that these structural shifts come at a price. “Until new domestic supply chains are established, project delays and cost inflation are inevitable,” the report concluded.