China puts tariff on steel pipe making them less competitive with US manufacturers
Texas manufacturers who produce steel oil and gas pipelines and drill pipe are expected to see a relatively modest impact from China's announcement it was slapping a 15 percent tariff on steel pipe from the United States.The tariff on steel pipe does not make a lot of sense. They are pricing themselves out of the market. As for the question about energy exports, they are sold at the world market price so it does not make much sense to target energy exports from the US. However, tariffs are obviously not always rational. Where China is exposed is when it subsidizes its products to allow predatory pricing. If a tariff raises the price of Chinese goods to offset the subsidies, that is a more rational tariff.
Last year the United States exported 832,000 metric tons of steel pipe, according to the U.S. International Trade Administration. More than 80 percent of that pipe went to Canada and Mexico, with China coming in a distant third.
"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," said Praveen Kumar, executive director of the University of Houston's Gutierrez Energy Management Institute.
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The steel pipe tariff is part of a sprawling $3 billion tariff imposed by the Chinese early Friday, in response to President Donald Trump's announcement he would enact tariffs targeting $50 billion in Chinese goods. Among the U.S. goods targeted by the Chinese are pork, apples and steel pipe, but officials in Beijing are believed to be considering further action depending on the economic impact of Trump's tariffs.