The Trump administration's various tariffs have caused concerns but have found some industry support, writes Julian Hast
The North American natural gas industry remains supportive of the new administration of President Donald Trump, despite facing higher costs as a result of the tariffs it has imposed on goods imported from allies and adversaries alike around the world.
Since his inauguration on 20 January, Trump has imposed, threatened and delayed tariffs on imports from a slate of different countries, including many products needed to build gas pipelines. These include a 25pc tariff on all imported steel, as well as pipeline systems' component parts imported from abroad — such as compressors, valves and meters that are produced or assembled in China, Mexico and other countries. The Trump administration has also delayed until 2 April a 10pc tariff on energy products imported from Canada and Mexico that are compliant with the US-Mexico-Canada free trade agreement. The uncertainty created by the threat of tariffs, and the frequent changes to their scope and target, could also deter the investment needed to build more gas infrastructure.
Trade groups representing gas pipeline operators have made cautious statements on the impact of the tariffs, while likely working behind the scenes in a bid to persuade the Trump administration to pull back on the tariffs. The Interstate Natural Gas Association of America (INGAA), which represents major gas pipeline firms Williams, Enbridge and TC Energy, has called on the Trump administration to work with the industry to develop "targeted exceptions to tariffs" for imports of "essential" energy infrastructure components. The American Gas Association, whose core membership includes investor-owned gas utilities, has warned a 10pc tariff on Canadian gas would hike costs for American consumers by $1.1bn/yr. Several US gas utilities have already informed state regulators that they will have to pass on additional costs to their customers if those tariffs end up going through, a source familiar with the matter told Argus.
Yet firms' executives have so far brushed off concerns about the effect of tariffs on their business. Canada-based Enbridge's pipeline systems are "as full as they have ever been" despite the tariffs imposed on Canada, chief executive Greg Ebel says. Alan Armstrong, chief executive of Williams, which operates the 10,000-mile Transcontinental pipeline system in the US, acknowledged that his costs would increase as a result of Trump's tariffs, but pointed out that those increases were "pretty small" compared with the costs associated with obtaining required permits to build and expand gas pipeline infrastructure.
Pipe dreams
Although the North American gas pipeline industry may not like the tariffs, it may be glad to have Trump back in office because it cares more about the potential to streamline the pipeline permitting process, which the president supports.
TC Energy is facing permitting difficulties in all three countries in which it operates — Canada, the US and Mexico, chief executive Francois Poirier says. The average time it takes TC Energy to secure the necessary permits for building a pipeline in the US has risen from 12-18 months to 28-36 months, while in Canada it has become "a three-year process", he says. Yet Poirier says he "absolutely" believes things will be better a year from now because of the re-election of Trump. "I believe the … Trump administration has the highest level of energy literacy of any … administration in the last 50 years," Poirier said.
But some observers, such as former US representative Tim Ryan — who was defeated in a US Senate election by now vice-president JD Vance in 2022 — offer a more cynical interpretation of the executives' muted response to Trump's tariffs. "Most companies want to stay in the president's good graces," Ryan told Argus.
