The trade war is already hurting the industrialists – here's why the energy could be the next

As US-China trade negotiations turn into a generalized war with tariffs and threats of new tariffs, US energy exports to China could suffer if Beijing threatens to impose tariffs on imports. American oil and oil. imports of products.

China has become, in recent years, a key export market for the growth of US energy exports. In fact, China is the second largest US customer in terms of crude oil after Canada and one of the largest importers of propane and liquefied natural gas (LNG) from the United States. Associations of US manufacturers, retailers, and oil and chemical producers have asked the US administration to find other solutions to tariffs, warning that additional levies would hurt jobs and the economy. growth of the United States.

If the United States were to impose tariffs on oil, American oil sellers would have to look for other destinations and attract new customers, which could cost them more.

Last year, more US crude oil was sent to China than any other destination except Canada, said Tuesday the EIA in an analysis. China received more US crude oil in 2017 than the combined third and fourth largest importers, the United Kingdom and the Netherlands.

U.S. Crude oil exports to China averaged 330,000 b / d between January and April this year, with February's sales in China exceeding even exports to Canada, according to EIA.

And this is not just crude oil. China was also the third largest destination for US propane exports last year, behind Japan and Mexico. About half of US propane exports went to Asia in 2017, displacing supplies from Middle Eastern countries and some regional production of propane.

For LNG, 15% of US exports went to China, making it the third largest LNG importer in the United States behind Mexico and South Korea.

However, China has explicitly excluded LNG from its list of US energy products that may be subject to tariffs because it aims to combat air pollution by massively switching from residential coal heating to residential gas heating.

Although China has significant coal reserves, it imports from the United States. Last year, China received 3.2 million short tons of US coal, equivalent to 3% of total US exports. This makes China the tenth largest destination for US coal exports. China has become a key trading partner for US energy exports, and potential tariffs on US energy products could hurt US producers and industries.

Last week, China and the United States imposed a new set of tariffs, and the United States announced on Tuesday that it could impose tariffs on an additional $ 200 billion dollars. 39, Chinese imports. "As a result of China's retaliation and its inability to change its practices, the president ordered the USTR to begin imposing 10% tariff on 200 billion dollars of Chinese imports" said Robert Lighthizer. If China reacts with energy tariffs, it could reduce sales of US energy products, analysts and executives told Reuters last month, when Beijing threatened to hit US tariffs on the United States. ;energy.

"This will force you to put your oil elsewhere, and it will cost you more" to attract more buyers, said Ron Gasser, vice president of Mammoth Exploration in Texas.

In a statement on the latest US list of potential new tariffs on China, David French, senior vice president of government relations at the National Retail Federation, said on Tuesday:

"The latest $ 200 billion list of products subject to tariffs against China doubles as a reckless strategy that will resonate again to hurt American families and workers." And more on " when "and" how badly. "The tariffs on such a wide range of products make it inconceivable that US consumers will avoid this tax hike as prices of daily products will be forced to rise and subsequent retaliation will destroy thousands of American jobs and will hurt farmers, local businesses and the entire community. "

Jack Gerard, Cal Dooley, and Edward R. Hamberger – the president and CEO of the company. American Petroleum Institute, President and CEO of the American Chemistry Council, and President and Chief Executive Officer of the American Railroads A Washington State Opinion Examiner released Wednesday that the trade war was threatening the US economy and could add "hundreds of billions of dollars in potential costs to US companies – costs that could ultimately be borne by consumers."

"Before tariffs, the private sector was ready to invest $ 1.34 trillion in energy infrastructure to support production, supporting more than one million jobs each year on average until 2035. The tariffs could stifle hundreds of billions of dollars worth of projects – including new pipeline infrastructure needed to move oil and natural gas from the prolific Permian Basin to the markets – the tariffs of 39%. steel alone could drive up the cost of a 280-mile pipeline, "Gerard, Dooley and Hamberger told me.

"It is already clear that this well-intentioned policy will make the United States less competitive, undermine the vision of energy dominance and the manufacturing renaissance of this administration, and will certainly destroy many more jobs than the United States." It does not protect it. "