US oil and gas companies hoping to avoid President Donald Trump's looming 25pc steel tariff will have to separately request exemptions for each type of product they import and may wait months to get a decision.
The US Commerce Department detailed its exclusion process today, before the steel tariff and a 10pc aluminum tariff go into effect on 23 March. The exclusion rules disappointed many industry officials who wanted broad exclusions for similar products and the ability for trade organizations to seek exemptions for multiple companies.
Oil and gas companies will be able to seek tariff exemptions immediately. But an individual company will have to show the product they are importing is not adequately available in the US or is needed for national security to qualify. US steel and aluminum producers will have the option of trying to block an exemption by objecting within 30 days, and tariff exemptions will generally only last for a year.
Commerce says it expects to make decisions on product exclusion requests within 90 days. But one industry official worries the exemption process could turn into a "paperwork nightmare" as hundreds of companies go through the process of seeking exemptions for each product that has distinct dimensions and coatings. Another industry official wonders if Commerce has enough staff to process the coming "influx" of exemption requests and objections.
A product exemption granted for one company will not automatically transfer to other companies, Commerce said, unless the agency approves a broad exclusion. This creates the risk that small oil and gas companies will "bear the brunt of the increased costs" because they lack the resources to file tariff exemption paperwork, the Independent Petroleum Association of America said.
"Costs are going to go up for the US oil and natural gas industry," the group said. "We are already starting to see that happen and we are particularly concerned this tariff may cause shortages of specialty parts."
The pipeline group the Interstate Natural Gas Association of America said it was concerned there could be "delays and uncertainty" if Commerce requires each company to apply for a product-specific exclusion instead of approving a broad exclusion.
Oil and gas companies argue that the tariffs will undermine Trump's push for "energy dominance" by increasing domestic production. The industry trade group LNG Allies on 14 March had asked Commerce to provide a "full, complete and immediate exemption" by today to make sure proposed liquefaction projects in the US remain competitive. The group did not immediately respond for comment.
ExxonMobil chief executive Darren Wood, Chevron chief executive Mike Wirth and nearly a dozen other oil industry executives went to the White House to meet with Trump on 15 March, one week after the tariffs were announced. The American Petroleum Institute, which arranged the meeting, said the executives discussed trade policy as one of their top issues but declined to say if tariffs were discussed.
