China Imposes Tariffs On U.S.-Made Pipeline Materials

China is imposing tariffs on 128 U.S. products, including steel and alloy pipe for oil and gas, effective on Monday, in a retaliatory move after the U.S. imposed tariffs on imported steel and aluminum as the trade dispute between the United States and China escalates.

China is now levying higher tariffs on US$3 billion worth U.S. goods, including a 15-percent tariff on the steel pipe that is used in oil and gas pipelines and that is manufactured in the United States, notably along the Texas Gulf Coast.

Along with U.S. stainless steel and alloy pipe used for petroleum or natural gas, other products slapped with 15-percent tariffs include fruit, nuts, wine, and herbs, while pork and scrap aluminum were hit with a 25-percent tariff.

The Chinese tariffs are seen as retaliation to last month’s U.S. tariffs on imported steel and aluminum—a 25-percent tariff on steel imports and a 10-percent tariff on aluminum imports—which U.S. President Donald Trump said he was imposing to address unfair global practices and to protect America’s steel and aluminum industries.

Texas steel pipeline and pipe manufacturers are expected to sustain a relatively modest impact from the 15-percent Chinese tariffs on U.S.-made oil pipes, according to Praveen Kumar, executive director of the University of Houston’s Gutierrez Energy Management Institute.

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“Bottom line, if the retaliation is on pipelines, Houston will not see much impact. However, if the trade war escalates to broader energy related machinery classes, then Houston will be more exposed,” Kumar told Houston Chronicle on March 23, when China first said it would be imposing tariffs in response to President Trump’s steel and aluminum tariffs.

While Texas manufacturers could see a limited impact on steel pipe in this round of Chinese tariffs on U.S. goods, the oil and gas industry is not happy with the U.S. tariffs on steel and aluminum, because oil and gas pipelines import about three-quarters of the steel used to build projects in the United States.

By Tsvetana Paraskova for Oilprice.com

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