Trump made the rash decision to double tariffs on imports of steel and aluminum from Turkey last week in response to a diplomatic dispute over Turkey's decision to detain and prosecute an American Christian pastor.
At the time I described that as a reckless decision because Trump is imposing tariffs for reasons that were never intended by the decades-old trade law he's using to impose them, but here's a more apparent and evident reason: it can lead to consequences that Trump almost certainly hasn't considered.
The energy industry says Trump's new tariffs on Turkish metal will dramatically increase the cost of their current projects which were already hit by Trump's initial round of tariffs.
“We are moving forward with the project, but believe that imposing a tax on pre-existing orders is unjust, especially considering the specific materials we purchased abroad were not readily available in the U.S.,” Willie Chiang, Plains’ chief operating officer, said on Tuesday.
The trade actions “threaten important energy infrastructure projects,” said Catherine Landry, a vice president at trade group Interstate Natural Gas Association of America. Companies were “being unfairly punished for participating in international trade,” she said.
Kinder Morgan Inc, the second largest North American pipeline operator, had already ordered nearly half of the specialized pipe needed for its Gulf Coast Express project from Turkish steel maker Borusan Mannesmann before the original tariff went into effect, spokeswoman Sara Hughes said.
Again, no one is going to cry for oil companies and their pipelines, but that's not really the point.
Today it's oil. Tomorrow it will be someone else.
Trump's trade war and now his whimsical use of tariffs in a diplomatic dispute is a distortion of the market that shouldn't exist. Projects that require advanced planning and financing are obviously more difficult when an outside factor can arbitrarily and dramatically alter the price at any moment.
I don't necessarily jest, but at this point companies may want to consider taking out Trump insurance policies that insure their loses from Trump's whims.
You know, they're not going to, but if Congress actually passed a major infrastructure investment bill, Trump's trade war could increase the cost of it by billions.