IEEJ：January 2018 ©IEEJ 2018
Special Bulletin
A Japanese Perspective on the International Energy Landscape (360)January 26, 2018

U.S. and the World One Year after Trump Inauguration
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, JapanOne year has passed since Donald Trump took office as U.S. president and launched hisadministration. What happened or failed to happen in the past year in the United States that remainedat the center of global governance as the world’s strongest economic and military power? How haveU.S. developments in the past year influenced the world? I here would like to review and make mypersonal comments on developments in the past year.
For making smooth progress in domestic politics, Republican President Trump has notbeen successful to take advantage of the domestic political environment where his fellow
Republicans have controlled both the Senate and the House of Representatives since his inauguration.
Plagued with severe disputes with his fellow Republican lawmakers as well as Democrats enhancing
their anti-Trump attitude, Trump has had difficulties in Congressional coordination over key bills
including the Obamacare reform. His performance seemed to have deviated from what he could haveachieved by taking full advantage of Republicans’ control of the administration and Congress
representing a unified Republican government. He has failed to fully exploit the advantageouspolitical capital. Late last year, however, Trump won the passage through Congress of a tax reform(massive tax cuts) bill as one of his key campaign promises and signed it into law at last. In a sense,
the tax cut enactment was one of his achievements in domestic politics.
Since his inauguration, President Trump frequently replaced core members of hisadministration. He remarkably reshuffled key White House posts including the chief of staff, thenational security adviser and the chief strategist. Particularly, Steven Bannon resigned as chief
strategist and left the administration after playing a key role in developing election and policy
strategies since the presidential election campaigns. Repercussions from this high-profile departureare attracting attention. Key administration officials surrounding Trump include his relatives such as
his daughter and presidential adviser Ivanka Trump and her husband and senior presidential adviser
Jared Kushner, former military officers such as Defense Secretary James Mattis, White House Chiefof Staff John Kelly and national security adviser Herbert McMaster, and former business leaders
such as State Secretary Rex Tillerson and Treasury Secretary Steven Mnuchin. Attracting attention
after Bannon’s departure from the administration is who would have influence on President Trump’s
policy consideration and planning, and how.
The Russian scandal including Russia’s suspected intervention in the presidential election
campaigns and Trump administration officials’ inadequate relations with Russia has remainedunresolved over the past year since the inauguration of the Trump administration, staying as one ofuncertainty factors surrounding the administration. Would the scandal become a factor to shake theTrump administration? We must pay attention to future relevant developments. In diplomacy, theUnited States’ international isolation has been pointed out on various occasions in the past year.
1

IEEJ：January 2018 ©IEEJ 2018
Based on his anti-Obama stance, President Trump exited from the Trans-Pacific Partnership freetrade agreement, offered to withdraw from the Paris Climate Accord and recognized Jerusalem as
Israel’s capital, shaking the world with his inward-looking attitude based on his “America First”
stance since the presidential election campaigns, rather than the attitude of a world-leading
superpower.
In January this year, however, President Trump indicated the possibility of United States’
return to the Paris agreement. In an interview with a U.S. media organization on January 25, he also
hinted at his readiness to return to the TPP agreement as well. Whether there could be a policy
turnaround is attracting global attention. However, the real intentions behind these indications andwhether they are backed by specific contents are still unclear and must be checked carefully.
President Trump has enjoyed a robust domestic economy in the past year. The Dow Jones
industrial average on the New York Stock Exchange surpassed 20,000 just after his inauguration andcontinued to hit a record high, reaching 26,393 on January 25, 2018. From the beginning of 2017,
the stock average soared by about 6,500 points or 32%. Stock price hikes in the Trump market
accelerated in response to the enactment of the abovementioned massive tax cuts. As a matter of fact,
how specifically and quantitatively President Trump’s economic policies have contributed to thebriskness must be analyzed. However, the Trump administration is likely to emphasize the stock
market upsurge as his achievement toward a midterm Congressional election later this year. However,some analysists see bubble factors behind the stock market upsurge. We must pay attention to future
stock market developments. Given the emergence of a virtuous circle in which the robust U.S.
economy exerts positive effects on the global economy, the future course of the U.S. economy will
attract attention from the viewpoint of its great influence on the global economy and energy market.
In the energy field, President Trump since his inauguration has implemented policies topursue energy dominance which he emphasized in his energy policy address last June, based on his“America First” stance. To step up the development of shale and other oil and gas resources, theTrump administration has promoted the opening of oilfields for development in the Gulf of Mexicoand others and the construction of pipelines and other infrastructure and reviewed environmental
regulations including those on methane emissions and hydraulic fracturing and upstream
development. While the administration has promoted and supported oil and gas development and use,U.S. oil and gas production has continued expanding, enhancing the United States’ position as theworld’s largest oil and gas producer. Supported by expanding production, oil and gas exports haveincreased. Particularly, LNG exports have gained momentum. However, attention must be paid to theextent to which Trump administration policies have contributed to oil and gas production expansion.
Rather than administration policies, the shale oil and gas industry’s cost reduction and productivity
improvement efforts and crude oil prices’ upward trend throughout 2017 have greatly contributed tothe expansion. This means that market forces have made greater contributions than government
policies.
This point is valid for other energy areas. The Trump administration has given policy
priority to the revival of coal but the path to the revival has not been easy. While U.S. coalproduction has slightly recovered thanks to increase in coal export, coal has faced severe
competition from gas and renewable energy. It is seen as difficult to use policy support for the full
revival of coal. In the face of coal and nuclear power plant closures, the Department of Energy
requested the Federal Energy Regulatory Commission to consider a regulatory reform plan to allow
baseload power costs to be recovered. Eventually, however, FERC concluded that it would be2

IEEJ：January 2018 ©IEEJ 2018difficult to find any legitimate grounds for introducing any mechanism or premium to allow suchcosts to be recovered. In this respect, coal and nuclear energy will remain exposed to marketcompetition. While some state governments have considered or implemented support measures fornuclear power plants as zero-emission power sources, federal support measures are still uncertain.
Future relevant developments will attract attention. As for renewable energy power generation thathas attracted global attention with rapid cost reduction, state-level support and cost cuts, rather thanfederal-level policies, have led renewable energy to expand in the past year.
In the environmental field, President Trump shook the world with his offer to withdraw
from the Paris agreement, before indicating his possible return to the agreement as mentioned above.
Future relevant developments will attract attention. U.S. GHG emissions could naturally decline
thanks to gas and renewable energy expansion. The replacement for the Clean Power Plan that
Trump has vowed to repeal is subject to future attention.
Regarding energy diplomacy, Trump policies’ impact on the Middle East might have been
the worthiest of attention. In the Middle East that has always been characterized by geopoliticaluncertainties, President Trump’s policies in the past year seem to have apparently accelerated
destabilization and crises, instead of stabilizing the situation, as indicated by problems caused by his
recognition of Jerusalem as Israel’s capital and his hardline attitude against Iran over the nuclear
agreement. We must pay attention to future U.S. energy policy developments including those related
to the Middle East as a major factor exerting great influence on the world and the internationalenergy situation.

Contact: report@tky.ieej.or.jp
The back issues are available at the following URL
http://eneken.ieej.or.jp/en/special_bulletin.html

3