An additional round of tariffs on $300 billion worth of imports from China would put more strain on US oil and gas supply chains and ultimately harm consumers, an American Petroleum Institute official warned on June 25.
The US oil and gas industry already is under pressure from tariffs on more than 100 products imposed under Section 301 of the 1974 US Trade Act by the Trump administration and from China’s retaliatory tariffs on US LNG, API Senior Advisor for International Policy Aaron P. Padilla told the interagency Section 301 committee.
“Expanding these tariffs would harm the US energy revolution by increasing production costs and creating further uncertainty for energy investments,” Padilla said. US President Donald Trump announced the additional tariffs on May 10.
Section 301 tariffs already levied on more than 100 products—including bearings, drill collars, electronic circuits, fluids, lithium batteries, meters, motors, pumps, pump parts, rotors, stators, steel, turbines, and valves—are hurting the oil and gas industry, Padilla said.
US energy interests are also harmed by Section 301 tariffs because of retaliation from China against US energy exports, Padilla said. “In the 9 months from October 2017 to June 2018, before the US first imposed Section 301 tariffs on imports from China in July 2018, China received 22% of total US crude oil exports and 4% of total US refined products exports,” Padilla said.
“In the 9 subsequent months, from July 2018 to March 2019, China received 3% (down from 22%) of total US crude oil exports and 2% (down from 4%) of total US refined products exports, demonstrating that China can easily turn to other countries, quite possibly US adversaries like Iran and Russia, to meet their needs,” Padilla said.
API members support free trade practices that enhance access to global markets and to global supply chains, Padilla told the interagency Section 301 committee. Its free trade principles recognize that enforcement actions may be necessary to respond to unreasonable or discriminatory trade practices and that Section 301 of the Trade Act provides the US Trade Representative’s Office a process to seek to compel other countries to stop such practices, he said.
“However, we believe that these and other trade remedies must be used in a prudent and targeted fashion to mitigate unintended impacts,” Padilla pointed out.
“We expect that the administration will recognize the collateral damage that additional tariffs would cause to the US oil and gas industry, economy, and consumers, and we urge the US to deescalate this trade dispute with China,” he said.
Contact Nick Snow at [email protected].
