President Donald Trump on Thursday appeared to rebuff efforts by US senators to make the case that the US-Mexico-Canada Agreement will fail in Congress unless the administration lifts steel and aluminum tariffs.
The steel tariffs have been broadly opposed by oil and gas sector interests who are concerned the tariffs drive up a major material cost for pipelines and production facilities and who fear replacement quotas could interfere with surges in production activity. Retaliatory tariffs that have hit US agricultural interests have added fuel to the recent pushback in Congress on tariffs.
Trump met with senators Thursday, including Senate Finance Committee Chairman Charles Grassley, Republican-Iowa, who had bluntly warned in a Wall Street Journal editorial April 28 that the USMCA is dead if the tariffs aren't lifted. There is no appetite in Congress to debate USMCA with these tariffs in place, wrote Grassley.
In a tweet Thursday afternoon after meeting with the lawmakers, Trump appeared to offer an answer, once again asserting that steel tariffs imposed under Section 232 of the Trade Expansion Act are working. "232 Tariffs make Pennsylvania and USA more prosperous/secure by bringing steel and aluminum industries back," he said. "Pittsburgh is again The Steel City."
The comments reflect the challenges for the oil and gas sector, along with a wide swath of other steel-consuming industries, as they seek to convince the administration to end tariffs imposed on steel imports from most countries around the world that began last spring. Tariffs also factor into upcoming trade negotiations with Japan and the EU.
CHINA TALKS
Separately, the US and China enter a key negotiating round the week of May 6 that could enable both sides to back off trade tensions that have spawned some headwinds for US LNG deals. It's still unclear whether the deal will fully extinguish US tariffs on Chinese goods and retaliatory tariffs on US goods that included a 10% tariff on US LNG imports into China, or whether it will retain the threat of tariffs as part of an enforcement mechanism.
US trade officials have supported tariffs as an important point of leverage as they negotiated for changes in Chinese market practices.
The achievement of a final deal, seen as possible in time for the G-20 summit in June, could be followed by finalization of a number of LNG contracts between US projects and Chinese buyers.
With China expected to be a major growing source of global LNG demand, US LNG developers have sought to line up long-term contracts with creditworthy Chinese counterparties in order to reach final investment decisions and secure financing for multibillion dollar terminal projects in the US. In general, developers seeking to get new projects off the ground are seen as more vulnerable to the US-China tariffs than those expanding existing projects.
