latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/biden-to-move-carefully-on-tariffs-on-energy-trade-supplies-8211-attorneys-62074792 content esgSubNav
Log in to other products

 /


Looking for more?

Contact Us
In This List

Biden to move carefully on tariffs on energy trade, supplies – attorneys

Blog

Essential Energy Insights - March 2021

Blog

what is the impact of the eu sustainable finance disclosure regulation sfdr

PODCAST

Episode 8: What the SolarWinds compromise means for information security

Blog

Infographic Q4 20 US Power Forecast


Biden to move carefully on tariffs on energy trade, supplies – attorneys

The Biden administration will take a measured approach to the U.S.-China trade relationship and will avoid yanking down tariffs that have hurt the LNG business between the two nations and affected the supply chain for the U.S. pipeline and solar industries, a panel of Washington trade lawyers and experts said Jan. 11.

"It's about sorting out what the highest priority issues are for the incoming administration and how these trade policies serve those objectives," Bracewell LLP Senior Principal Josh Zive said during a webinar hosted by the law firm. "If the current tariffs are consistent with those Biden objectives, it's going to be harder to get rid of them; if they are at odds, easier."

The Trump administration imposed tariffs on China under Section 301 of the Trade Act of 1974. Chinese retaliatory tariffs, such as a 25% tariff on U.S. LNG imports into China, have been viewed as slowing long-term contracts to support a new wave of U.S. LNG export terminals.

Jonathan Stoel, a partner at Hogan Lovells, observed that the cabinet and agency nominees of President-elect Joe Biden support actions to deal with climate change. They will be confronted early on with the question of whether the U.S. should continue tariffs on solar panels and cell products put in place by the Trump administration.

"I would argue that all the options whether it is direct subsidies to producers and industries that control [greenhouse gas emissions], whether it's something to help U.S. producers so that they can deal with a more free trade environment and get rid of the tariffs — I think the sky ought to be the limit," Stoel said.

Kelly Ann Shaw, also a partner at Hogan Lovells, agreed. "Trade is going to be a component part of the Biden administration's broader foreign policy and broader domestic policy, unlike [during] the Trump administration, where it was one of the top three issues and in many ways stood in and of itself," she said.

Steel tariffs

Panelists also assessed the outlook for lifting U.S. tariffs on imported steel and aluminum imposed by President Donald Trump under Section 232 of the Trade Expansion Act of 1962. The tariffs have raised the costs of imported steel used in oil and gas pipeline development.

Stoel suggested it is politically difficult to remove the tariffs because there is almost always a winner and a loser in each case. But he predicted the Biden team might lay out protocols for lifting tariffs on certain countries.

Bracewell's Zive said the diplomatic context around the Section 232 tariffs "makes them amongst the easier [tariffs] for a Biden administration to step back from," particularly with a stated objective of strengthening the U.S. relationship with European allies. European countries were not accustomed to being targeted for posing national security threats, he said.

In Zive's view, the use of Section 301 tariffs on China was "not entirely revolutionary" in nature and, therefore, was harder to pull back than the Section 232 tariffs, and the Section 301 tariffs also fit inside a coherent strategy.

Hill perspective

Offering a view from Capitol Hill, Jonathan Tsentas, legislative assistant for Sen. Robert Menendez, D-N.J., expressed a similar theme. "If I could give everybody one main message ... it's that we should start thinking about how trade policy fits into our domestic priorities first, and the other implications will flow from that," Tsentas said.

On the Section 232 tariffs, there will be support in Congress for setting criteria up about what a country has to do to meet the goals of the program, Tsentas said.

On the China tariffs, Tsentas said the administration might not "rework the program in a major way" but might try to "gently encourage" companies in sensitive sectors to move their production out of China.

"One thing that would find a lot of support in a Democratic Congress is being clear what the terms of a tariff exclusion might look like, and making that process very clear, very transparent, and for a set period of time, so that our domestic industry is not constantly wondering, 'Will this program still be here in a year from now? Will I still be able to get an exclusion?'" he said.

Maya Weber is a reporter with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.