Additional Energy Tariffs Could Harm U.S., Consumers

Mark Green
Posted September 10, 2019

Natural gas and oil, the bellwether of the U.S. economy, continue to be the collateral damage in the administration’s trade war with China – frustratingly ironic given the White House’s stated goal of bolstering American energy.

Important parts for offshore natural gas and oil drilling and production, as well as critical parts and accessories for energy projects are among products imported from China that will be subject to a 30% tariff as of Oct. 1 – an increase from the current 25% tariff.

Higher costs for these needed components could increase the cost of production and, ultimately, energy costs to U.S. consumers. Stephen Comstock, API director of tax and accounting and trade developments:

“API is opposed to tariffs and we support free trade principles. On this proposed list are parts for offshore production platforms and other essential components for the development of natural gas and oil projects. The impacts to the industry are plain. Higher costs for production hurt the American energy industry, jobs and consumers. … We urge the administration not to raise tariff rates on the components necessary to maintain our energy production and our energy security.”

We’ve talked about the consumer impacts of the U.S.-China trade war (see here and here). Indeed, Americans are paying for the cost of these misguided trade policies, not China. Basically, tariffs are a tax on consumer goods used by millions of Americans, as well as a drag on U.S. jobs.

It’s bad policy that’s demonstrably bad for a U.S. strength – natural gas and oil, of which the U.S. is the world’s leading producer. In addition to the tariff increase just announced, the U.S. natural gas and oil industry is negatively impacted by the administration’s tariffs on more than 100 industrial products under Section 301 and by steel tariffs under Section 232, and is subject to a 25% retaliatory tariff on U.S. liquified natural gas (LNG) exports to China and a 5% tariff on U.S. crude oil exports.

Again, current tariff policy is an unforced error that could see the U.S. fritter away benefits from hard-earned energy abundance. The administration should listen to our industry and others in the business community and end these self-defeating trade policies.