API calls tariffs disruptive to oil and gas industry

By Patrick C. Miller | June 05, 2018

Following the Trump administration’s announcement last week to impose tariffs on steel and aluminum imports from Canada, Mexico and the European Union, the American Petroleum Institute (API) criticized the action as being disruptive to the U.S. oil and gas industry’s supply chain.

“We are deeply discouraged by the administration’s actions to impose tariffs on our three closest trading partners—Canada, Mexico and the European Union—and view this as a step in the wrong direction,” said Jack Gerard, API president and CEO.

Last Thursday, President Donald Trump signed two proclamations related to steel and aluminum tariffs. A White House statement said that after months of discussion, Trump took the action “to protect America’s national security from the effects of global oversupply of steel and aluminum.” On March 8, Trump announced a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports.

“Increased prices in specialty steel could threaten the continued domestic production of oil and natural gas and natural gas liquids—which are at their highest levels of production since 1949—and could raise energy costs for U.S. businesses and consumers, while threatening the nation’s ability to achieve President Trump’s goal of energy dominance,” Gerard noted.

The White House said the U.S. reached an arrangement with South Korea on steel, which was announced on April 30. In last week’s proclamations, the U.S. reached arrangements with Australia, Argentina and Brazil on steel imports and with Australia and Argentina on aluminum imports.

However, the U.S. was unable to reach agreements with Canada, Mexico and the European Union. As of June 1, tariffs on the suspended tariffs on these countries were lifted and went into effect. The administration said it will continue discussions with the countries and remains open to discussions with other countries.

“The implementation of new tariffs will disrupt the U.S. oil and natural gas industry’s complex supply chain, compromising ongoing and future U.S. energy projects, which could weaken our national security,” Gerard said. “Additionally, Canada, Mexico and the European Union are imperative members of our defense industrial base and are top military allies—far from a threat to America’s security.”

Gerard said API believes the Trump administration should recognize the national security benefits of the U.S. oil and natural gas industry by granting the organization’s member companies product exclusions from steel tariffs and quotas. He also called for transparency and flexibility in the process to reduce the impact on U.S. oil and natural gas production, transportation and refining.