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Energy industry hopes to take advantage of exemption allowed by Trump's steel tariffs

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The proclamation includes a potential carveout for "U.S. parties" to apply for an exemption if they can't meet their demand for steel domestically or for national security reasons. (AP Photo/Martin Meissner)

Energy industry representatives said Thursday they would be interested in applying for an exemption from President Trump’s order imposing steel and aluminum tariffs.

Trump's proclamation will apply a 25 percent tariff to most steel imports and a 10 percent tariff to most aluminum imports.

Canada and Mexico will have exemptions from the duties on the condition they renegotiate the North American Free Trade Agreement to Trump's liking.

The proclamation also includes a potential carveout for “U.S. parties” to apply for an exemption if they can’t meet their demand for steel domestically or for national security reasons.

"There will be a mechanism for U.S. parties to apply for exclusion of specific products based on demand that is unmet by domestic production or on specific national security considerations,” reads a framework of Trump’s tariff proclamation released by the White House.

Before Trump made the tariffs official Thursday, a coalition of oil, natural gas and pipeline groups urged the president to allow exemptions for when businesses need steel products from overseas for energy production, processing, refining, transportation, and distribution.

The groups said the type of steel used in pipelines and other energy infrastructure is a niche market, and most domestic steel producers have left the pipeline market because of its high cost.

They said Trump’s tariffs could drive up the cost for projects that require steel. Developers of pipelines and other infrastructure could pass on higher prices to the oil and gas producers that use their lines.

A trade association that represents exporters of liquefied natural gas, which is a key part of Trump's "energy dominance" agenda, argued Thursday that its members should qualify for exemptions.

“There are at least five kinds of steel used for different purposes in LNG facilities and, while some is U.S. sourced, some is not available in this country,” Daphne Magnuson, a spokeswoman for the Center for LNG, said in a statement to the Washington Examiner. “For example, the steel used for the cryogenic tanks where LNG is stored is of a specialty nature that no U.S. companies are certified to produce.”

Center for LNG members include producers, shippers, terminal operators and developers, “and certainly fit the description of parties that qualify for the exemption,” Magnuson said.

Neal Kirby, spokesman for the Independent Petroleum Association of America, which represents independent oil and natural gas producers, said an exemption could be beneficial depending on how it’s applied.

“Industry would be interested in an exclusion – preferably an industry-wide exception,” Kirby told the Washington Examiner. “If the application process is on a per-product basis, we’re fearful small- and medium-sized businesses will bear the brunt of the increased costs. Similar to additional government regulations, these businesses don’t have the resources or manpower to apply for a waiver for each imported steel and aluminum product they rely on.”

The association sent a letter to the White House Thursday morning requesting that line pipe and oil country tubular goods, or OCTG, used for well construction, surface management, and pipelines, not face tariffs.

“Steel imports are essential to our industry and imports comprise up to half of the U.S. supply for the specific quality of steel in the Line Pipe and OCTG marketplace,” Kirby said.

The Association of Oil Pipe Lines, representing pipeline owners and operators, also wants an opportunity to avoid tariffs.

“While we are disappointed the president took this action, it is now crucial the exemption process work to avoid U.S. pipeline workers losing their jobs,” said Andy Black, president and CEO of the group.

Catherine Landry, a spokeswoman for the Interstate Natural Gas Association of America, said her group is awaiting more details on how the Trump administration intends to provide exemptions to domestic companies or industries.

“We need some details,” she told the Washington Examiner. “It is too early to say whether our members will seek exemptions or what effect exemptions may have on line pipe availability.”

The American Petroleum Institute vowed to work to minimize the impact of tariffs on all aspects of energy development, from offshore drilling, to pipelines, refineries and manufacturing facilities that support them.

“We will work with the administration for maximum flexibility and consideration in how today’s proclamation is applied to minimize the impacts to U.S. investment in infrastructure, energy development, and building new facilities for America’s future,” said Jack Gerard, president and CEO of API, which represents the oil and natural gas industry.

Trump’s official proclamation includes few details on exemptions for steel consumers, such as whether entire industries or individual companies could apply.

It offers U.S. parties the ability to seek tariff relief for "any steel article" not produced in the U.S. in sufficient amounts or quality.

It says, “relief shall be provided for a steel article only after a request for exclusion is made by a directly affected party located in the United States.”

Commerce Secretary Wilbur Ross, can decide to provide an exemption to those who apply, after consultation with other Cabinet secretaries.

If Ross makes an exemption, he must publish a notice in the Federal Register.