Insights
This paper is the fifth installment in a series examining the multifaceted impacts of tariff and trade policies. By delving into the nuances of these policies, we aim to provide valuable insights and perspectives that will inform strategic business decision-making and foster resilience in an increasingly volatile global market. This installment focuses on the energy sector, exploring how tariffs impact supply chains, project management, and long-term planning across traditional and renewable energy landscapes.
Publication Date: April 17, 2025
While tariffs have long been a consideration in energy, they have now emerged as a central influence on energy production, commodity pricing, and macroeconomic conditions, resulting in global impacts on energy executives, developers, finance personnel, and legal advisors. As current tariff policies shift rapidly and unpredictably, they introduce layers of complexity to an already intricate global energy marketplace. Energy projects—whether in oil and gas, renewables, or power generation—are particularly susceptible to the cascading effects of trade restrictions. From materials, parts sourcing, and cost escalation to labor disruptions and quality assurance, tariffs affect every phase of an energy project’s lifecycle.
The energy sector’s inherent dependence on specialized equipment, globally dispersed suppliers, and long lead times makes it especially vulnerable to trade policy shifts. With many major energy assets designed, fabricated, and transported across multiple continents, even modest changes in tariff structures can trigger significant cost increases, delays, or contractual disputes.
"The impact to companies of increased litigation regarding supply chain issues will be expansive. This cost must be considered when estimating the total costs of the tariffs to companies as a whole, and particularly energy companies with large capital asset needs."
Karyl Van Tassel
Senior Managing Director, Global Investigations
Contract disputes add an additional layer of costs over and above the increased capital assets costs. In this environment, proactive planning, strategic sourcing, and sophisticated modeling are essential.
Energy supply chains are long, global, and often fragile. Tariffs on any component or subcomponent can ripple through the project, compounding costs and complicating logistics.
Consider the implications for developers of utility-scale solar farms or offshore wind projects. For example, tariffs affecting aluminum framing, semiconductors, or specialized gearboxes may not only increase procurement costs but also prompt a complete redesign of the bill of materials. Similarly, oil and gas operations relying on imported assembled modules, or just pipe, compressors, or pressure control systems may find themselves revisiting procurement strategies to maintain viability.
Further, sourcing substitutions due to tariffs may create risks around quality control, compliance with technical standards, compliance risks, or the certification of alternative suppliers—especially when sourcing shifts to non-traditional regions with limited track records. These substitutions can also drive increased oversight requirements during construction and commissioning.
“Major oil, gas, and industrial projects use modular construction concepts to leverage global resources and cost benefits. Effective risk management and contingency planning can mitigate impacts of global events like tariff changes and resource availability. Investors and developers should proactively assess these risks during planning to ensure quality, schedule, and budget objectives of the projects are achieved.”
Reza Nikain
Senior Managing Director, Construction Advisory
Energy projects are capital intensive and schedule sensitive. Tariff uncertainty introduces variables that can derail both timelines and budgets. Project managers must now account for potential:
Moreover, tariffs don’t impact only new projects. For projects already underway—or even those approaching closeout—project forecasts may see schedule interruptions, increased delays, and cost increases for imported items that have not been delivered pre-tariff adjustment.
In response to this evolving environment, some firms are employing tariff engineering—a practice that involves altering the physical or legal classification of imported goods to reduce duties. While long utilized in manufacturing, its application in the energy sector is gaining traction.
Some of these strategies include:
Though powerful, tariff engineering requires careful legal and technical coordination to remain compliant with customs regulations and avoid penalties. Its success depends on early engagement with trade specialists, engineers, and legal counsel—ideally during the design phase of projects.
“Global energy tariffs present a double-edged sword—on one hand, they can potentially disrupt pricing structures, increase costs for consumers, and strain international supply chains. On the other hand, they may drive innovation, accelerate the shift to renewables, and create new opportunities for domestic production and energy independence. Navigating this balance will define the next phase of the energy transition. Understanding upstream and downstream supply chain and leveraging tariff engineering strategies may provide both risk mitigation and strategic optionality.”
Andrea Korney
Vice President of Sustainability
Objective:
Reduce import duties on a fully assembled compressor valve through strategic reclassification and assembly sequencing.
Step-by-Step Strategy:
Outcome:
By importing components under favorable HTS codes and completing the product in the US, the company can reduce landed costs by 5% to 10%—all while maintaining regulatory compliance.
One of the most challenging aspects of the current trade environment is its uncertainty. Tariff regimes can change rapidly, with little notice, and often without grandfathering provisions. This means that every stakeholder—owners, contractors, engineers, manufacturers—must remain alert and agile, adapting to new risks across every phase of a project:
Each stage requires dedicated focus on the origin, composition, and classification of equipment and materials—considerations that are often secondary in earlier phases of project execution.
Navigating tariffs in the energy sector requires more than spreadsheets and good instincts. It requires complex, dynamic modeling that captures:
Equally important is the need to stay abreast of exemptions, waivers, and new classifications, which can shift competitive advantages and project viability overnight. For instance, components that were once restricted may be eligible for exclusion due to national security considerations or critical infrastructure exemptions.
To effectively manage these challenges, energy companies must partner with experienced consultants who bring cross-disciplinary expertise in global trade, engineering, and project risk management. These professionals can help organizations make informed sourcing decisions and develop resilient contracting strategies to maintain compliance in a landscape where the rules are constantly in flux.
Tariff policies are no longer a footnote in the energy industry—they are a fundamental consideration for project success. They touch every part of the value chain, from conceptual design through to asset operation and decommissioning. In this context, the ability to anticipate, adapt, and respond to trade-related risks has become a key differentiator for energy companies seeking to maintain profitability and delivery certainty.
It is also important to note that energy is an input cost that affects all industries. For example, the consumer buying energy (residential or corporate) will not only pay a higher price for energy generated outside their country if there are increased tariffs, the price for domestically produced energy likely also will increase because of the reasons cited above. Either way, energy is more expensive in today’s economic climate.
At J.S. Held, we help clients navigate the intersection of global trade, supply chain risk, and energy project management.
For further insights and strategic consultation, contact J.S. Held’s trade and risk advisory team at [email protected].
Andrea Korney is a global advisor and Vice President of Supply Chain and Sustainability for J.S. Held’s ESG & EHS Digital Solutions group. She specializes in climate solutions, environmental and social sustainability, carbon management, and strategic supply chain sustainability. Andrea has extensive experience in carbon reduction strategies, responsible sourcing, and sustainable finance, working across industries such as energy, mining, and manufacturing. She also provides expert witness testimony on environmental and sustainability matters, offering authoritative insights in legal and regulatory contexts. In addition to her advisory work, Andrea actively contributes to shaping sustainability policies and initiatives through her participation on several boards. She has served as an Ambassador to the US Department of Energy, where she supported strategic discussions on clean energy transition and climate resilience. Her expertise in climate risk assessment, ESG reporting frameworks (CSRD, TCFD, SBTi), and ethical supply chain governance make her a recognized thought leader, dedicated to advancing corporate responsibility and driving impactful sustainability solutions on a global scale.
Andrea can be reached at [email protected] or +1 725 567 0668.
Karyl Van Tassel is a Senior Managing Director in J.S. Held's Global Investigations practice. Karyl has more than 30 years of experience providing investigative services, including global anti-corruption and bribery, Ponzi schemes, financial statement fraud, and asset misappropriations. She applies her knowledge to assist clients in establishing compliance programs related to fraud, anti-corruption, and export controls, including active/continuous monitoring systems. Karyl is also well established as an expert witness, working with clients to address accounting issues, financial damages, forensic accounting, economic and valuation challenges they face in a wide variety of litigation matters, including securities, intellectual property, breach of contract, antitrust, lender liability, fraud, and oil and gas matters. Karyl is a certified public accountant in Texas and a Certified Fraud Examiner.
Karyl can be reached at [email protected] or +1 713-504-8778.
Reza Nikain, PE, P.Eng., PMP, PSP, CFCC, CCA, is a Senior Managing Director in J.S. Held’s Construction Advisory practice. Reza has more than 35 years of experience in dispute resolution, management, consulting, and risk management across an extensive range of domestic and international engineering and construction projects. Reza's global project experience spans various sectors, including oil/gas (refineries, pipelines, storage facilities, offshore facilities, and LNG complexes) and energy/power (fossil fuel, renewables, nuclear, biomass, and power transmission). He also has extensive expertise in industrial and chemical process plants, low-rise buildings, and transportation projects. He provides litigation support and expert testimony in courts, international arbitral forums, and special administrative panel proceedings in various geographic locations.
Reza can be reached at [email protected] or +1 332 330 3179.
This communication may contain forward-looking statements. These statements are based on J.S. Held’s current expectations and are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. This material is for informational purposes only and is provided ‘as is’ without any warranties and J.S. Held assumes no liability for errors, omissions, or any actions taken based on this material.
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