Trump Tariffs: Venture Global May Be a Winner From Trade Negotiations
Despite the possibility of retaliatory tariffs, we see tailwinds for the stock.
One of the few sectors with the potential to benefit from Donald Trump’s tariffs are US natural resource producers. In Trump’s first trade war, both European and Asian governments sought to appease his administration by increasing purchases of raw materials and agricultural products with mixed results. The intensity of the current tariff proposal will necessitate swift action since the administration’s policy is not rooted in trade regulations but power politics.
LNG producer Venture Global VG is well positioned to secure long-term agreements, the lack of which currently worries investors. It is essentially the only party that could offer the quick and easy victory both Trump and foreign leaders want, but capacity is limited, setting up a bidding war for uncommitted volumes. Shares are down at the time of writing, likely anticipating retaliatory tariffs and a global economic slowdown, but the contracts inked are likely to last longer than the tariff.
There are additional tailwinds for projects in development. Again, Venture will likely be the winner. It has recently announced a brownfield expansion with an aggressive start date in 2028 or 2029, in addition to several new projects coming online over the next decade. These projects currently have no contracted buyers attached. Not a quick victory, but a fig leaf that can provide the appearance of victory.
Oil and NGLs are unlikely to play in negotiations. Export capacity has been running near the max and would require new investment by midstream firms. As US liquids production is expected to peak in 2030, midstream firms should not be expected to make that investment without a major carrot. Even if the investment is made, those projects would be unlikely to come online within this administration. Finally, unlike LNG, which requires expensive liquefaction prior to export, oil is fungible and essentially export-ready. With both OPEC and Russia holding back substantial production, there are alternatives for consumers.
Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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