US energy industry slams Trump’s ‘job-killing’ steel tariffs
Trump said on Thursday he would impose tariffs of 25 percent on steel imports and 10 percent on imported aluminum next week, in a move intended to protect US industry.
By: Reuters | Washington | Published: March 2, 2018 9:28 am
US President Donald Trump. (AP Photo)
The US oil and gas industry on Thursday slammed President Donald Trump’s plan to impose tariffs on imported steel, saying the move would kill energy jobs by raising costs for big infrastructure projects. Officials at the nation’s top energy industry trade groups issued statements urging Trump to reconsider the idea, and a source familiar with Exxon Mobil Corp’s investment plans said the tariff could lead the company to curtail an expansion of one of the country’s biggest refineries.
Trump said on Thursday he would impose tariffs of 25 percent on steel imports and 10 percent on imported aluminum next week, in a move intended to protect US industry. But critics said it would fail to boost jobs and risked stoking a trade war with China.
Pipeline trade groups noted that the cost for specialized steel needed to build arteries that carry petroleum would rise. “We are urging the administration to avoid killing U.S. jobs through a steel tariff that impacts pipelines,” said Andy Black, CEO of the Association of Oil Pipe Lines (AOPL).
The US energy industry relies on imported steel for drilling equipment, pipelines, liquefied natural gas terminals and refineries. The tariff plan is “inconsistent with the administration’s goal of continuing the energy renaissance and building world class infrastructure,” said Jack Gerard, president of the American Petroleum Institute.
A study by AOPL last year showed that a 25 percent increase in pipeline costs could increase the budget for a typical project by $76 million. TransCanada’s proposed Keystone XL expansion would cost at least $300 million more.
A spokeswoman for the Interstate Natural Gas Association of America said the tariff could pose a problem because the type of pipe and steel used to make thick-walled interstate pipelines are hard to source domestically.
Both groups said that about three-quarters of current pipeline project spending ends up in the pockets of American workers and business owners.
The Center for Liquefied Natural Gas, a trade group, said tariffs could have the “unintended effect of endangering much-needed US LNG export projects,” which use special steel components not produced in the United States. LNG backers are trying to build a second wave of export facilities that cost billions of dollars each.
The tariffs would have uncertain impacts on coal miners, who make up a portion of Trump’s base. Luke Popovich, a spokesperson for the National Mining Association, said if tariffs boosted domestic steel making it would be a boon for some producers of metallurgical coal – used in steel mills.
But metallurgical coal miners also export to markets in Asia, a business that has soared this year. If Trump’s tariffs resulted in a trade war with Asian countries, it could harm US coal miners, Popovich said.
The Trump administration has sought to support all sides of the fossil fuel industry, but that has at times led to squabbling between drillers and miners.
A source familiar with Exxon deliberations about a possible expansion of the Beaumont, Texas, refinery said an increase in steel prices could impact the company’s decision on whether to add a third unit for distillation of crude.
The source said Exxon could bypass duties on imported steel by importing the components of a crude unit directly from a manufacturer overseas into the refinery, which is a foreign trade zone.
An Exxon spokeswoman was not immediately available to discuss the company’s plans. The Beaumont refinery currently can process 362,300 barrels of crude a day; a proposed expansion would make it the nation’s largest.
Meanwhile, a US-based railcar manufacturing executive said the bulk of railcars made in North America come from US or Canadian steel and fears the tariffs will trigger a trade war that leads to higher domestic prices. Roughly 60 percent of the railcar cost comes from steel, said the executive, who was not authorized to speak to the press. “I am real concerned. I think this is going to jack up prices and backfire,” the executive said.
US farmers said they also feared a potential trade war. “These tariffs are very likely to accelerate a tit-for-tat approach on trade, putting US agricultural exports in the cross-hairs,” said Brian Kuehl, executive director of Farmers for Free Trade.
The agriculture sector is already stinging from a global oversupply of crops and slumping farm incomes. China, which imports more than a third of all US soybeans, could retaliate, heaping more pain on the sector, the American Soybean Association warned.
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