Analysis by Energy Workforce President Tim Tarpley
This week, USTR conducted two concurrent public hearings on 301 investigations, which may lead to new tariff lines being released later this summer. The first 301 investigation utilized the existing authorities under 301 to penalize countries that have, according to the investigation, taken sufficient steps to curb forced labor from their supply chains. This investigation is one of a handful that may be used to replace the IEEPA tariffs that were thrown out by the Supreme Court and replaced with temporary authorities that expire at the end of July. The potential new tariffs under this line could result in new baseline rates for over 94% of US imports between 10-12.5% depending on the final results of the investigation.
EWTC continues to engage with USTR and express concerns about the effects of these tariffs on the energy supply chain. EWTC filed comments expressing these concerns, and I testified personally at the hearing, supporting some elements of the proposed rule and requesting changes to others:
EWTC Supports:
- EWTC supports the proposed rule not stacking 301 tariffs on top of existing 232 tariffs. This provision is critical to energy production as a significant portion of the most critical energy products are either partially or fully made of steel and aluminum.
- The exclusions included in Annex A are helpful, although the list should be expanded to include additional critical energy components, as well as expanding the scope to include energy products. For example, many products in the annex are limited in scope to aircraft, but they are also critical to energy production.1
- EWTC supports the exclusion of USMCA-qualifying goods from the new 301 duties. Mexico and Canada are critical integrated partners in the North American energy supply chain.
EWTC Requests USTR to Consider:
- While there is some relief for critical energy components in Annex A, there are many critical energy components that are not included, and the scope is limited. We request that these annexes be expanded to include additional critical energy components vital to supporting American energy dominance.
- EWTC requests that any new section 301 duties continue to be eligible for duty drawback.
- Certain specific equipment used in offshore energy production in the Gulf of America, such as undersea trees, is not produced in the United States. This specialized construction will be difficult, if not impossible, to reshore in the time period necessary to avoid significant cost increases to Gulf of America offshore production. Products that cannot readily be manufactured in the U.S. should be exempt from additional 301 duties due to their critical role in energy dominance.
- EWTC requests that the tariffs resulting from this investigation, USTR does not stack on any other 301 tariffs investigations.
Additionally, USTR conducted a hearing specifically on Brazil that could result in additional 301 duties on the country. Of particular concern regarding Brazil is the number of complex products used in offshore production that are not readily produced elsewhere in the world. Of specific concern were subsea trees, which are critical to offshore production in the Gulf of America. EWTC provided written comments and testified in person to highlight the critical need to maintain ready access to this high-tech manufacturing in Brazil, which is not readily available elsewhere.
Tim Tarpley, Energy Workforce President, analyzes federal policy for the Energy Workforce & Technology Council. Click here to subscribe to the Energy Workforce newsletter, which highlights sector-specific issues, best practices, activities and more.
