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Oil, Gas Industry Urges Trump to Consider Exemptions to Proposed Steel Tariff

As President Trump considers imposing tariffs on steel and aluminum imports, a coalition of trade groups representing the oil and gas industry urged the president to at least consider exemptions for steel products in the energy sector, especially when there isn't a sufficient domestic supply.

Meanwhile, in a keynote speech at CERAWeek by IHS Markit on Wednesday, Department of Energy Secretary Rick Perry said he could not speak for Trump about the proposed tariffs, and was unsure when they would be enacted. Also Wednesday, the White House said Mexico, Canada and other countries could be given exemptions.

In a letter to Trump Wednesday, the coalition added that while they "understand and respect" Trump's concern for domestic steel manufacturers, they also urged caution because tariffs could result in the cancellation of pipeline projects and job losses in the energy sector. Such tariffs could also imperil Trump's plans to shepherd in a new period of "American energy dominance" and work against national energy security concerns.

"Pipeline projects create construction jobs, bring affordable energy to millions of American consumers and support American energy production," wrote the coalition, which included the Interstate Natural Gas Association of America (INGAA). "These projects may not go forward if a steel tariff makes pipeline steel unavailable on a reasonable timeline and at a competitive price.

"Just like in real estate, promising pipeline projects have not gone forward because the costs were too high, or the needed building materials not sufficiently available. We fear that broad tariffs on the specialty steels used by our industry would cause future projects to be delayed or canceled, thus threatening America's energy dominance and risking higher prices for families at the gas pump, natural gas ratepayers and energy-consuming employers nationwide."

Last week, Trump proposed imposing a 25% tariff on steel imports and a 10% tariff on aluminum, regardless of the country of origin. Several oil and gas trade groups, including the American Petroleum Institute (API), the Center for Liquefied Natural Gas (CLNG) and the Association of Oil Pipe Lines (AOPL), immediately pushed back against the idea on the grounds that it could kick off a devastating trade war.

The tariffs have also proven unpopular with several oil and gas executives speaking this week at CERAWeek.

"I think this is an ongoing conversation and a debate, if you will, an internal discussion," Perry told conference attendees on Wednesday. “I’m not going to speak for the president here…I’m not sure he’s made up his mind with clarity where he wants to go on this."

White House Press Secretary Sarah Huckabee Sanders told reporters Wednesday that exemptions would be made on a "case-by-case and country-by-country basis." She said a formal announcement on the tariffs was expected by the end of the week.

The coalition that signed Wednesday's letter added that while they hoped domestic steel and pipe manufacturers would be able to supply products for future pipelines, pipeline-grade steel "is a high-cost specialty product in a cyclical niche market," and that some domestic manufacturers no longer produce it.

"In fact, for certain pipeline steel products, there is zero domestic availability today," the coalition said. "Applying steel tariffs to transmission pipelines, oil country tubular goods, and other parts of oil and gas production and transportation cannot be the best way to help."

The letter was signed by INGAA CEO Donald Santa; CLNG Executive Director Charlie Riedl; AOPL CEO Andrew Black; Dena Wiggins, CEO of the Natural Gas Supply Association; and Mark Sutton, CEO of the GPA Midstream Association (GPA).

Other signatories were Texas Pipeline Association President Thure Cannon; Toby Mack, CEO of the Energy Equipment and Infrastructure Alliance, and V. Bruce Thompson, president of the American Exploration & Production Council.

Days after taking office, Trump signed a presidential memorandum ordering the Commerce Department to develop a plan to maximize the use of American steel for pipeline construction. But the following April, five industry groups representing the majority of U.S. pipeline operators -- API, AOPL, GPA, INGAA and the American Gas Association -- warned Trump that requiring American steel for new pipelines could lead to the unintended consequence of construction delays.

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