Republican Gov. Greg Abbott of Texas, a supporter of President Trump, on Thursday said the administration’s new tariffs on steel and aluminum imports could threaten future economic growth in the state and across the country.
“I urge you to reconsider these tariffs in light of the unintended negative consequences for American industries,” Abbott said in a letter to the president.
Fears of an international trade war have simmered since the Trump administration announced a 25% tariff on imported steel and a 10% tax on aluminum imports, including leading U.S. allies Mexico, Canada and the European Union. Oil and gas trade associations, traditional supporters of GOP policies, also have voiced alarm.
“According to U.S. Census data, Texas accounted for more than $8.3 billion in steel and aluminum imports last year, which is more than double any other state,” Abbott wrote. “These steel and aluminum imports are crucial for the construction and maintenance of drilling wells, pipelines and other infrastructure that are the backbone of our oil and gas industry.”
Constructing “significant portions of this infrastructure depends on certain types of steel for which there is no U.S. manufacturer,” he said, noting that industry experts have estimated the new tariffs could dramatically increase the costs of completing wells in onshore formations and building more liquefied natural gas production lines.
Abbott commended Trump initially in the letter for “updating and modernizing” U.S. trade policies. “These efforts, coupled with your administration’s tax cuts and regulatory reforms, make this an exceptional time for American businesses and mark the beginning of a new era of economic prosperity for the United States.” Texas, Abbott said, is committed to leading the way to bolster U.S. industries and protect jobs.
“We are extremely fortunate to be on the cusp of a second U.S. shale boom that has added jobs in oilfields across Texas and the United States.” However, for the Permian Basin to reach its full potential, he said, substantial infrastructure investment is necessary.
“If the new tariffs continue to drive up the cost of oil and gas production, America’s quest for global energy dominance could be significantly hindered.”
According to the governor, nearly 500,000 Texans work in industries that use steel or aluminum, but only around 7,600 are directly employed in producing the metals.
“Texas alone has 225,000 jobs in oil and gas exploration, production and services, which is nearly twice as many as the 140,000 jobs nationally in steel and aluminum production that the new tariffs are intended to safeguard,” said Abbott.
In addition to the steel and aluminum import taxes, tariffs are set to go into effect on roughly $50 billion worth of foreign goods beginning this summer, and “China’s retaliatory tariffs also threaten the economies of Texas and other states particularly dependent on international trade with China.”
Texas last year also exported an estimated $8 billion-plus of “tariff-eligible goods to China, the most of any state,” Abbott said, including nearly $1 billion in agricultural products. While commending Trump’s commitment to curtail “unfair trade practices and putting American businesses and workers first,” he asked the president to “consider the negative impact that the new tariffs on steel and aluminum imports and other goods will have on the economy of Texas and the nation as a whole.”