Energy and natural resources sectors adjust quickly to evolving tariffs
Our latest survey shows that executives are using a mix of caution and foresight to develop effective mitigation strategies
The US energy industry faces a complex landscape shaped by rapidly changing tariff policies, global trade dynamics, and regulatory challenges. KPMG LLP recently surveyed senior executives across industries, including in the natural resources, oil and gas, and chemicals sectors, to discover how their organizations are strategizing to mitigate the effects of tariffs on their operations, workforce, and market positioning.1
Natural resources organizations
The natural resources sector is navigating tariffs with a blend of caution, agility, and innovation, though challenges persist, especially around labor and regulatory compliance.
Resilient competitive position
At the time of the survey, among respondents in the natural resources sector, 87 percent indicated that tariffs have had mixed impacts across different markets. Almost three quarters (73 percent) reported sales declines or deferrals, noting that tariffs affected 11 percent to 25 percent of their product portfolio, especially raw materials and equipment and machinery. While gross margins have largely remained unchanged, over half of respondents anticipate a decrease in the coming year.
Further, 60 percent of respondents reported their organizations are only moderately ready for sudden tariff changes. Most have balanced short- and long-term planning, but nearly half rate their tariff strategies as only moderately effective. Respondents increasingly use AI-driven regulatory tracking (70 percent) for scenario modeling and compliance. Dynamic pricing models (40 percent overall, 70 percent among natural resources) and cash flow management strategies (83 percent) help mitigate tariff exposure.
Trade flows and cost pressures
Canada, Europe, and South America are primary import sources, accounting for 15 percent, 12 percent, and 12 percent of imports, respectively. While cost increases have been relatively modest—0 to 5 percent for Canadian imports and 6 percent to 15 percent for European and South American imports—these incremental rises are impacting bottom lines. On the export side, Europe, ASEAN, and Canada are the top destinations. Notably, 83 percent of natural resources respondents exporting to ASEAN reported a sales decrease of 1 percent to 10 percent, and 74 percent of executives surveyed saw similar declines or stagnation in Europe. Sales to Canada have remained more stable, even in the face of retaliatory tariffs.
Cautious workforce and AI investments
Just 10 percent of natural resources respondents are increasing domestic investments, while 47 percent are proceeding carefully and 33 percent have postponed or scaled back plans. Interestingly, about 70 percent reported that tariffs have most significantly impacted investments in AI and machine learning, highlighting the natural resources sector’s reliance on technology for future growth. Workforce impacts are also notable; 57 percent of respondents saw reduced hiring and 70 percent invested in automation (with little job growth). High labor costs and regulatory complexities remain major hurdles. Despite these challenges, 90 percent of organizations have focused on specialized training and development, and 83 percent have reskilled their workforce to boost resilience.
Reshoring and operational agility
Reshoring operations to the US is under active evaluation for 20 percent of natural resources respondents, with 47 percent involved in early stage / informal discussions. Fifty-three percent find it not feasible due to high labor costs, tariff impacts on machinery, and production disruption. Still, the sector demonstrates agility: 40 percent of respondents said their organizations can pivot within 3 to 6 months, and another 50 percent within 7 to 12 months. Sentiment toward the current US trade and tariff regime is mostly neutral, with 67 percent expressing neither strong confidence nor insecurity.
By leveraging technology, strategic planning, and workforce development, natural resources organizations are managing to remain resilient and competitive in a shifting global landscape.
Oil and gas and chemicals
The oil and gas and chemicals sectors are at the frontline of global trade dynamics, and recent tariff changes have brought both challenges and opportunities. Companies are focusing on scenario planning, risk modeling, and building financial resilience. Strategic partnerships, sourcing changes, and supply chain diversification are common responses. Dynamic pricing and financial hedging are also on the rise, with most companies passing on up to 50 percent of tariff costs to customers.
Tariff cost passed on the customers
Uneven impact of tariffs
For oil and gas and chemical companies, the top import sources are Canada, Europe, and the Middle East, according to respondents. Notably, 35 percent of respondents importing from Canada reported a 16 percent to 25 percent increase in costs, while 65 percent of those sourcing from Europe faced similar cost hikes. While sales to South and Central America remained stable, nearly 60 percent of exporters to Europe experienced a sales decline of 1 percent to 10 percent, highlighting the uneven impact of tariffs across markets.
Gross margins remain stable
Among respondents, 60 percent reported varied impacts across markets, while 30 percent saw a weakened competitive position; 57 percent experienced a decrease of 6 percent to 15 percent in sales, and 53 percent reported an overall decline in product sales. Despite these pressures, half of the respondents noted that their gross margins have remained stable, with similar expectations for the coming year.
Low confidence in tariff stability
Investment sentiment has cooled. Only 13 percent of respondents are increasing domestic investment to offset export shifts, while 40 percent are proceeding cautiously and 37 percent have postponed or scaled back investments. The biggest casualties are market expansion and facility upgrades, with respondents citing these as the most affected investment areas. Only 10 percent express confidence in tariff stability.
Steep workforce cuts
The oil and gas and chemicals sectors have seen the highest reduction in hiring among all industries surveyed: 63 percent of respondents reported cutbacks and 50 percent paused hiring due to economic uncertainty. Regulatory complexities (73 percent), added tariff impact on imported machinery and raw materials (67 percent) and high labor costs (63 percent) are the main obstacles to shifting production to the US. Among respondents, 60 percent find reshoring not feasible, mainly due to cost and regulatory barriers. Most organizations estimate a timeline of one to two years for any significant operational shift.
The oil and gas and chemicals sectors have seen the highest reduction in hiring among all industries surveyed: 63 percent of respondents reported cutbacks and 50 percent paused hiring due to economic uncertainty.
Frederick Morris
Managing Director, Infrastructure, Capital Projects, and Climate Advisory, KPMG US
While tariffs have introduced complexity and uncertainty for oil and gas and chemical companies, organizations are responding with a blend of caution, innovation, and resilience. As the landscape continues to evolve, adaptability and strategic foresight will be key to traversing the road ahead.
Footnotes
1. In September 2025, KPMG surveyed 300 US-based senior executives in various functions about their views on the US proposed tariffs and their effect on their company and industry. Of the total surveyed executives, 30 represented natural resources organizations and 30 represented oil and gas/chemicals companies. For this survey, we defined natural resources companies as those focused on mining, metals, and forestry products, with oil and gas/chemicals companies more specialized in hydrocarbons and refining.
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