Keeping a Supply Chain Watch on Trump 2.0 

We recently published our inaugural “Trump Watch” series blog on how supply chain execs can navigate Trump 2.0 tariff policies. We’ve been following The Economist’s coverage of Presidential policy updates in its “First 100 Days” tracker.  

We decided to launch our own “Trump Watch” series which follows the Economist’s content with supply chain design perspective from Optilogic thought leaders. 

New President, New Energy Policies 

There have been numerous examples in just the past 40 years of shifts in energy policy with the entrance of a new president, including Reagan’s reversal of Carter’s conservationist energy policies, and George W. Bush drilling for oil in the Arctic National Wildlife Refuge (ANWR) after taking over from Bill Clinton in 2001.  

Trump’s second term blew the previous pace of change out of the water, as he signed several executive orders that directly affect U.S. energy policy just on his first day in office. 

Here’s what supply chain executives need to know about how the Trump 2.0 energy policies will influence supply chain design.

Trump’s Energy Policies and How they Impact Supply Chains  

Trump’s energy policy impacts supply chain design by influencing energy costs, operational processes, import tariffs, geopolitical risks, and sustainability considerations. Businesses must carefully design and analyze these factors to develop resilient, cost-effective supply chain strategies. 

• Increased Domestic Energy Production: Trump’s policy emphasizes expanding domestic fossil fuel exploration and drilling, stating that, “American energy dominance is the most reliable way to ensure the stability and affordability of American energy prices.” (Source: The White House Fact Sheet) This policy can lead to more consistent and potentially lower energy costs for businesses operating within the U.S.

 

• Regulatory Changes: The policy includes streamlining regulatory processes and accelerating energy infrastructure projects. For example, in February 2025, FERC commissioners appointed by Trump introduced new rules that ease restrictions on natural gas pipeline approvals, accelerating infrastructure development. This can reduce delays and costs associated with energy-related projects, making it easier for businesses to plan and execute supply chain strategies

 

• Tariffs on Energy Imports: Tariffs on energy imports from countries like Canada, Mexico, and China can increase the cost of imported energy resources. This may lead to higher operational costs for businesses that rely on these imports, necessitating adjustments in supply chain design to mitigate the impact.

 

• Withdrawal from the Paris Agreement: Trump’s removal of the U.S. from the Paris climate agreement ends U.S. involvement in all climate agreements and financial commitments. While it will take about a year to take effect, the message it sends about the new administration’s priorities is immediate. This also means the Biden goals for emissions reduction are dead in the water.

 

• Geopolitical Tensions: The policy’s emphasis on energy independence and protectionism can lead to geopolitical tensions and trade disputes. China’s rare earth minerals ban puts added tension on supply chains and puts even more scrutiny and importance on Trump’s proposal to share in Ukraine’s rare earth minerals as a way for Zelensky’s country to reimburse the U.S. for the billions in aid for the Russia war effort.Businesses need to consider these risks when designing their supply chains, as they can affect the availability and cost of energy resources.

 

• Sustainability Considerations: Canada, China and Mexico are all manufacturers of electrical grid components critical to the growth of clean energy, including transformers, circuit breakers and switchgears. Companies with sustainability goals may need to reassess their supply chain strategies concerning the policies’ focus on fossil fuels. This could involve exploring alternative production sources, investing in efficient technologies, and enhancing the analysis of sustainability initiatives.

Trump Energy Policy Considerations for Your Supply Chain Design  

While there might be some short-term reductions in transportation costs due to increased domestic energy production, the long-term effects of the new energy policies could be more complex due to funding freezes and regulatory changes. 

The impacts of Donald Trump’s energy policies on supply chain costs can be analyzed through several factors, particularly energy prices, regulatory changes, and infrastructure shifts. Here are some of the likely effects: 

 1. Energy Prices and Fuel Costs

Trump’s energy policies were generally focused on boosting domestic oil, natural gas, and coal production, alongside deregulating the energy sector. The likely impacts on supply chain costs from energy prices are: 

• Lower fuel prices: By increasing domestic production and promoting fossil fuels, Trump’s policies could lead to a decrease in fuel costs. Lower fuel prices would reduce transportation expenses for moving goods across long distances, which would benefit supply chains that rely on trucking, shipping, and air transport. 
• Reduced reliance on foreign oil: Greater energy independence could mitigate risks from international energy price fluctuations, providing some stability in fuel prices for businesses.

2. Shift Toward Fossil Fuels

A strong push for fossil fuel development (e.g., oil, natural gas, and coal) could have mixed effects: 

• Increased production efficiency: If energy supply increases and costs go down, manufacturers might benefit from cheaper raw materials (e.g., chemicals, plastics) derived from petroleum and natural gas. This would lead to lower production costs. 
• Market volatility and geopolitical risk: A policy heavy on fossil fuels, without greater diversification, might lead to vulnerability to market volatility, especially if other nations or global environmental movements impose tariffs or restrictions on fossil fuel-based products.

3. Infrastructure and Transportation

Trump’s push for infrastructure development, including pipelines and oil-related infrastructure, could improve transportation and energy distribution networks: 

• Improved logistics and reduced transportation costs: New pipelines, for example, could streamline the transportation of fuel, reducing costs for logistics companies that rely on fuel and energy for delivery. 

• Infrastructure bottlenecks: However, if infrastructure projects face delays or legal challenges (due to opposition to fossil fuel projects), it could temporarily disrupt supply chains and increase costs in the short term. 

Overall, Trump’s energy policies could lead to a reduction in transportation costs, especially for distributors reliant on fuel. While short-term costs will go down, the long-term impact on supply chains will depend on how the world shifts toward an energy strategy and how geopolitical dynamics evolve.  

Deregulation might also bring both benefits (lower costs) and risks (potential increase in demand). Companies with fossil fuel-dependent operations could see lower energy and transportation costs, but those with international dependencies or commitments to sustainability may face different results.

Reimagine Your Trump 2.0 Supply Chain Design with Cosmic Frog  

Optilogic Cosmic Frog is a supply chain design solution that enables anyone in your company to answer supply chain questions using a shared virtual supply chain model. Using Cosmic Frog, analysts can anticipate energy policy impacts, evaluate alternative strategies, and rapidly implement results with easy access for business users. 

Cosmic Frog’s transportation route optimization capability allows you to see how changes in your supply chain network design would impact transportation choices.