There is a lot of uncertainty about tariffs right now. But if the U.S. is a net winner in the trade war, the resulting environment will be favorable for companies like Energy Transfer (ET) that transport, store, and receive goods through pipelines.
To be clear, if the forecast is wrong, Energy Transfer may not perform well. Higher tariffs on raw materials (steel and aluminum) will increase costs for pipeline companies, and continued escalation of the trade conflict may ultimately hurt the economy. This is definitely not good news for companies that rely on growing energy transportation volumes.
Why is the U.S. a net winner in the trade war? The U.S. has a number of advantages. As the world’s largest economy, the U.S.’s trade surpluses with many countries show that the economic structure of many countries is highly dependent on exports to the U.S. If this export market is lost, it will take these countries much longer to adjust their economic structure than the U.S. will have to find alternative suppliers.
These tariffs appear to be both tactical and strategic. Tactically, they stimulate the conclusion of trade agreements and remove obstacles for U.S. exporters by creating a more level playing field. Strategically, they encourage more industrial activity and investment in the U.S. Even if President Trump removed all tariffs tomorrow, the threat of tariffs returning will always be there. Therefore, companies must consider manufacturing in the U.S. to serve the U.S. market. If successful, these initiatives could shift manufacturing to the U.S., increasing domestic natural gas demand. A trade deal could lead to more U.S. LNG sales overseas. Both outcomes are positive news for midstream natural gas companies like Energy Transfer, and there’s a good chance that the 90-day tariff pause is a prelude to achieving those outcomes.
Meanwhile, Energy Transfer could continue to secure additional organic expansion projects. The company’s $2.7 billion Hugh Brinson pipeline project is set to enter commercial operations in 2026. Energy Transfer has several other projects in the pipeline, including Blue Marlin, Lake Charles LNG, and carbon capture and storage projects. The company could also begin returning more cash to investors by securing additional expansion projects and continuing its integration strategy.
