Additional Section 301 tariffs on China would cause further harm to the US oil and gas industry, an American Petroleum Institute official told US Trade Representative Robert E. Lightizer at an Aug. 21 hearing on the matter. “Broadly, this action, especially when added to Section 301 positions taken earlier this year, represent continued steps in the wrong economic direction,” API Tax Policy Director Stephen Comstock said in his testimony.
“We understand the need to curb discriminatory trade practices, but our actions should be of a prudent and targeted fashion and implemented through a multilateral approach with our allies,” Comstock said. “We believe this approach could better achieve the administration’s main trade objective as well as other energy policy objectives while mitigating unintended effects on the US economy.”
Comstock said the US oil and gas industry relies on various industrial components on the proposed tariff list to fulfill the Trump administration’s energy policy goals.
“Supply chain cost disruptions and cost increases that would be caused by these additional Section 301 tariffs would likely hurt US energy growth and negatively impact jobs and investments,” Comstock said. “Our industry relies on imports from China on many products listed under the additional proposed tariffs and has already suffered harm from the finalized tariffs enacted by the administration.”
Comstock said the additional products include:
• Natural barium sulfate covered under HTS Codes 2511.10.10 (natural barium sulfate) and 2511.10.50 (natural barium sulfate in a not-grounded form). Comstock noted that this is a dense mineral commonly used as a weighting agent for all types of drilling fluids, used to turn the drill bit, remove cuttings, and—critically—maintain control over the well while drilling is under way.
• Raw material and component parts used to support US manufacturing of oil field service and subsea production equipment, such as taps cocks, valves, and similar appliances for pipes, boiler shells, tanks, or vats which are covered under HTS Code 8481.80.30 and not specified or indicated elsewhere, and iron or steel articles covered under HTS Code 7326.90.86 and not specified or indicated elsewhere.
• Components used in pressure control, completion (bridge plug and packers) and artificial lift equipment necessary for well construction and oil and gas production operations.
“We recognize that there is a process companies could use to exclude their import from the tariff, but we have had experience from the Section 232 process that it does not work efficiently,” Comstock said. “There is an overall lack of transparency in the decision process or understanding of the metrics used to make such determinations. Companies seeking an exclusion are seldom given an opportunity to adequate rebut challenges or provide additional facts.”
He also pointed out that China currently is the third largest importer of US LNG, and those export amounts have been increasing to match the country’s rising demand for gas. “The US is one of the world’s main LNG suppliers, but other countries are capable of supplying China—including Australia, Qatar, Malaysia, and Russia,” Comstock said. “This trade dynamic suggests that additional tariffs by the Chinese on US LNG will hurt the US more than it hurts China and naturally [provide an incentive for] other LNG suppliers to fill this market.”
Contact Nick Snow at [email protected].
