More Tariffs, More Problems

Jessica Lutz
Posted July 26, 2018

The Trump administration has long touted its commitment to U.S. energy production but continues to push policies that directly counter these efforts, hurting U.S. workers and consumers in the process. The proposed Section 301 tariffs – and the retaliatory tariffs from China that they will provoke – are no exception.

Free and fair‐trade practices enhance access to global markets and global supply chains, benefiting American industries, the economy and consumers. This was the message delivered by API Senior Policy Advisor Aaron Padilla at yesterday’s Office of the U.S. Trade Representative (USTR) hearing on Section 301 tariffs:

“In recent years, the U.S. oil and natural gas industry has experienced significant growth, and this energy production has allowed for greater U.S. energy security. Furthermore, for the first time in decades, the U.S. also enjoys a competitive advantage in chemicals and plastic production, made possible by affordable domestic natural gas, the U.S. petrochemical industry’s primary feedstock. Trade flows in both energy products and in the industrial components used in the manufacturing of oilfield equipment have bolstered the U.S. economy, created jobs for U.S. workers, and supplied U.S. consumers with more affordable energy.”

His testimony went on to explain that additional tariffs on industrial components could jeopardize access to “products needed to build the infrastructure and production facilities necessary to fulfill the Administration’s own energy goals.”  Beyond the detriment to U.S. energy growth, the resulting supply chain cost disruptions and cost increases would have a cascading effect on U.S. jobs, investments, and ultimately the consumers.

We’ve discussed what’s at stake for U.S. energy – specifically exports of domestic crude oil – in an intensifying trade standoff between the United States and China. We’ve detailed why tariffs are a threat to America's national security, as well as the important ways free energy trade benefits the U.S. Additional tariffs could result in diminished access and higher costs for essential materials, leading to shortages and potentially delaying and/or blocking important energy projects that are central to U.S. economic strength.

It’s hard to overstate the impacts the administration’s tariffs could have – and are already having – on the natural gas and oil industry, with residual effects on local, regional and national economies and our energy transportation system. Policies that erect impediments to the U.S. energy renaissance and its broad benefits are the wrong policies for the United States. Padilla:

“Expanding the current list of 301 tariffs would cause disproportionate economic harm to the U.S. natural gas and oil industry…Our industry will be further harmed by China’s retaliatory tariffs placed on U.S. exports, including tariffs on U.S. crude oil and refined products that China has stated its intent to levy… We strongly believe that any Section 301 effort to address discriminatory and market‐distorting practices of China be undertaken only after a consultative approach at home coupled with a multilateral approach abroad.”

Read Padilla’s prepared remarks here.