Swiss industrial giant says Trump tariffs will create ‘inflationary environment’

Hello and welcome to Energy Source, coming to you from New York.

US President Donald Trump has made adjustments to his tariffs on imports from Canada and Mexico, as he gave a one-month reprieve for carmakers. US commerce secretary Howard Lutnick said the president would “consider” relief for certain other sectors.

But the fallout from an escalating trade war already caused oil prices on Wednesday to drop for the third day in a row, falling 3 per cent to its lowest level in three years.

My colleague Jamie Smyth interviewed the chief executive of TC Energy, one of the largest pipeline companies in North America, who said Trump’s tariffs on Canadian and Mexican oil and gas would fuel inflation, particularly on US petrol prices, and threaten energy security.

Our first item today features a warning from Switzerland’s industrial giant ABB that tariffs will trigger inflation and reduce investment in the US’s top trade partners. Our second item takes a closer look at a new study that found more than half of the world’s greenhouse gas emissions in 2023 were linked to just 36 fossil fuel and cement producers.

Thanks for reading — Alexandra

Swiss industrial giant warns Trump tariffs will create an ‘inflationary environment’

US President Donald Trump’s sweeping tariffs on Canada and Mexico will create an “inflationary environment” and reduce investment in the country’s top trade partners, Switzerland’s industrial giant ABB has warned.

Morten Wierod, the chief executive of ABB, told Energy Source that the tariffs would increase the price of “everything” and that free trade was the “most efficient” way to operate.

“It will lead to a more inflationary environment because these tariffs will be paid by the people that are going to buy these products. There’s nobody else to pay for it,” said Wierod.

Wierod added that the tariffs would result in the reduction of ABB’s employment and investments in Mexico and Canada. Eighty per cent of the goods the Swiss giant sells in the US are produced in the country and it plans to boost the percentage higher. Earlier this week, it announced a $120mn investment to expand electrical equipment production in the US.

The warning from Wierod arrives amid mounting concern from businesses and consumers that Trump’s decision to impose 25 per cent tariffs on Canada and Mexico will trigger massive disruptions in the world’s largest economy.

The US relies on Canada and Mexico for grid equipment and crude imports to produce petrol and diesel in its refineries. The US Midwest and north-east also consume significant amounts of hydropower from Canada.

Earlier this week, Canadian politicians threatened to issue retaliatory tariffs on exports to the US or cut off supplies of electricity. The US imported more than $110bn in fossil fuel, electricity and clean tech from Canada last year, according to BloombergNEF.

The tariffs on electricity and grid equipment arrive as the US witnesses historic growth in electricity demand driven by the race to lead in artificial intelligence, the onshoring of manufacturing, and electric vehicle adoption.

“Tariffs are bad for all American manufacturing . . . They’re a pressure on the economy that’s really hard to ignore,” said a top official at an energy trade association.

Analysts warned that the tariffs would raise prices for ratepayers and complicate the president’s goals to slash electricity costs by 50 per cent early in his second term.

“He seems to be basically doing the opposite of what would be required to bring energy prices down,” said Antoine Vagneur-Jones, head of trade and supply chains at BloombergNEF. (Amanda Chu)

Only 36 companies account for half of global emissions in 2023

More than half of the world’s greenhouse gas emissions in 2023 can be linked to just 36 fossil fuel and cement producers, according to a report from the Carbon Majors database. 

The climate watchdog found that emissions from the world’s largest oil, gas, coal and cement producers increased in 2023, with state-owned companies making up 16 of the top 20 emitters.

The top five state-owned emitters — Saudi Aramco, Coal India, CHN Energy, National Iranian Oil Company and Jinneng Group — accounted for nearly a fifth of all global emissions in 2023. The top five investor-owned emitters — ExxonMobil, Chevron, Shell, TotalEnergies and BP — made up 5 per cent of emissions. 

Emmett Connaire, senior analyst at Carbon Majors, said many climate accountability cases worldwide were being brought against investor-owned companies.

“For state-owned companies, it’s not like western governments can sue them for their emissions as they’re under direct control of nation states,” said Connaire. 

The group’s report arrives as countries backpedal on their climate commitments and oil and gas producers double down on fossil fuels almost 10 years after the Paris climate agreement. 

The report’s findings are based on a database that traces the emissions from production and combustion of products from 180 of the largest oil, gas, coal and cement producers from 1854 to 2023. 

The organisation’s data has been used by activists in litigation against fossil fuel producers and has helped shape climate legislation. Vermont, which became the first US state to charge oil companies for climate change damages, used data from the Carbon Majors database in its “climate superfund” law. 

Chinese companies contributed more to emissions than any other country. The group also found that eight Chinese companies were responsible for 17 per cent of global emissions in 2023, largely because of coal, which is the largest source of emissions. 

Although emissions from coal and cement producers increased in 2023, natural gas emissions declined by nearly 4 per cent while emissions from oil companies remained steady.

Emissions increased the most in Australia, Asia and North America, growing 11 per cent, 6 per cent and 3 per cent, respectively, from 2022. In comparison, emissions declined 4 per cent in Europe and increased less than 1 per cent in the Middle East. (Alexandra White)

Job moves

• Gianluca Bacchiocchi has rejoined law firm Clifford Chance as a partner in its global financial markets team as the firm expands its energy and infrastructure financing capabilities.

• The Center for International Environmental Law has appointed Rebecca Brown as president and chief executive. Most recently Brown served as vice-president of global advocacy at the Center For Reproductive Rights.

• The American Clean Power Association named Tara McGee as senior director of federal affairs for tax and trade. McGee recently served as tax and trade policy adviser to US Senator Shelley Moore Capito.

• BP plans to hire two new directors as part of its pivot back to oil and gas. The move suggests the company will have significantly more directors than the average 10-person FTSE 100 board.

Power Points

Energy Source is written and edited by Jamie Smyth, Myles McCormick, Amanda Chu, Tom Wilson and Malcolm Moore, with support from the FT’s global team of reporters. Reach us at energy.source@ft.com and follow us on X at @FTEnergy. Catch up on past editions of the newsletter here.