Vermilion Energy CEO: U.S. oil producers could likely lose from steel tariffs
The threat of American tariffs on Canadian steel sent shivers through the northern nation’s oil industry, sparking fears of higher costs for everything from pipelines to drilling equipment.
U.S. President Donald Trump’s 25 per cent levies on foreign steel and 10 per cent duties on imported aluminum are a “troubling development” that will require close attention, said Nick Schultz, vice president of pipeline regulation and general counsel for the Canadian Association of Petroleum Producers.
“Steel is important in every part of the oil and gas industry from drilling, production, processing, storage and transportation utilizing pipelines,” Schultz said in an e-mailed statement. “If Canada is not exempt, these proposed tariffs on steel imports will add a significant burden to the industry on both sides of the border and there could be unintended consequences if there are retaliatory measures taken.”
Canada is the top provider of both U.S. steel and aluminum imports, while the U.S. is a major provider of equipment to its northern neighbor’s energy industry. Canadian oil and gas industry purchases of U.S. goods and services are expected to have an impact of US$45.6 billion on the U.S. economy from 2017 through 2027, according to the Canadian Energy Research Institute. Those purchases may create or sustain more than 400,000 full-time jobs in the U.S. during that period, the group estimated.
Specifics of Trump’s plans are still unclear, but Canadian Foreign Minister Chrystia Freeland has vowed that the country would take “responsive measures” if it’s not exempted from Trump’s tariffs.
Those retaliatory measures could make American-produced equipment more expensive to buy in Canada. Not to mention that higher costs for steel imported to the U.S. could raise prices for that gear as well.
“It would be an increase in costs -- that would be the direct impact,” Dinara Millington, vice president of research for the energy researcher, said in an interview. “Your prices are going to be higher for the goods and products you’re purchasing.”