Trump’s tariff on China could also affect the US oil and gas industry

The global oil and gas trading scene was shaken a few days ago when U.S. President Donald Trump revealed his plans on implementing new tariffs on Chinese products valued at $60 billion, reports New York Times.

With the threat of new tariffs now looming, various sectors are looking for ways to help ease the effects of the new regulations. Although the upcoming tariffs are intended to be focused on materials and products coming in from China, it could affect the U.S. oil and gas industry as well.

Trump’s recent announcement with regards to placing a new tariff on steel is not sitting well with the American oil and gas manufacturing industry, says Oil Price. Steel is an essential material in their production as the process makes use of heavy equipment like drillers, platforms, and pipelines. Most importantly, building processing facilities requires a lot of the said material.

Now, the said industry is worried that the tariff would negatively affect production rates. By not having access to the same amount of steel than they used to, manufacturers might need to downsize their production first to help streamline the controlled source of steel.

To address the concern, the Department of Commerce recently detailed an exclusion process that would help manufacturers reduce the tariff’s impact. If the application process for the exception is passed, oil and gas producers will be able to have access to steel from outside the country.

However, the worry of the oil and gas industry goes far beyond having access to steel exports from top producers like China. The country directly affected by Trump’s tariff is also firing back, but this time, it is targeting the steel pipe producers.

China firing back with tariff on steel pipes

China recently announced that it is applying a 15 percent tariff for steel pipes for the U.S., Chron reports. Of course, by imposing a new tariff, the latter’s oil industry will have another issue to worry about, and it is not something that the Department of Commerce can help them with.

Directly affected by China’s tariffs are the Texas steel oil and gas pipe producers. The U.S. is a big exporter of steel pipes used in oil and gas production. China was third when it comes to imports, preceded by Canada and Mexico, respectively.

The tariffs might not have a big impact on the industry for now. However, if Trump and China’s trade battle continues, the steel pipe producers, as well as oil and gas manufacturers in the U.S., will remain under constant pressure.

The tariff threats could take a toll on the Chinese trading sector, but we’ll see how things change once the new regulations come into full effect. Understandably, Trump’s recent announcement is going to have various effects on the global trading scene as the U.S. is still a top importer of raw materials.

(Featured image via DepositPhotos)