Trade

Trumps Floats More Tariffs During Pandemic

Written by SK Ashby

Trump's scheme to increase the price of oil has fizzled out because American producers won't agree to cut output alongside Russia and Saudi Arabia who also may not agree with each other, but Trump is considering other ways to "help" the oil industry even if they don't want it.

There are a myriad of reasons why imposing tariffs on foreign oil would backfire, but Trump says he's considering that.

When asked at a White House press briefing under what conditions he would impose the levies, Trump said, “If the oil price stays the way it is...I would do that, yeah, very substantial tariffs.” [...]

“I would use tariffs if I had to. But I don’t think I’m going to have to, because Russia doesn’t benefit by having this and Saudi Arabia doesn’t benefit by having this. Oil and gas are their major sources of income so it’s obviously very bad for them,” he said.

The American Petroleum Institute and other energy interests have told Trump they oppose tariffs, fearing the measures would add costs to importing crude and materials for refineries.

A significant portion of the oil and gas produced by American firms is exported into the global market where it's purchased by other countries or even by other American businesses after it has changed hands.

In addition to raising the cost of importing from the global market, imposing tariffs on foreign oil would undoubtedly lead to retaliatory tariffs on American oil. And then no one wins. The net effect would be an increase in energy prices for average Americans with no benefit to the industry because the industry would pay more just to do business.

It would be like Trump's tariffs on foreign steel and aluminum, but significantly worse because the increase in price would be passed down directly at the gas pump instead of being filtered through manufacturers and supply chains. Average people don't drive down the street to buy metal, but we all fill up.

Needless to say, the last thing we need during a pandemic and a recession is artificially higher gas prices to go along with all of the other artificially higher prices for goods subject to Trump's ongoing trade war. Tariffs are still in place on roughly $400 billion in foreign goods from various countries including China. Americans are drinking more during these long, isolated days at home and Trump's tariffs on European spirits went into effect not long before the pandemic began.