Analysis by Energy Workforce President Tim Tarpley
Last week, after a rollercoaster ride in the markets, President Trump instituted a 90-day pause on the imposition of the April 2nd “reciprocal” tariffs that were imposed on the majority of the world. This pause brought some stability to the markets. However, oil continued to hover in the low 60s due to tariff concerns, slowing the world markets, and recent actions by OPEC to increase production. With the pause in many tariffs, the White House has stated that they continue negotiating with countries one-on-one and will reevaluate at the end of the 90-day pause. This week’s markets appear to have stabilized to some extent.
While many countries have chosen the negotiation route, the trade war with China has escalated in recent days. China has taken perhaps the most aggressive stance of any other country with the administration. So far in the conflict, first Trump imposed a 54% tariff on China at the beginning of April, followed by a 34% retaliatory tariff by China on US goods. In response, the President escalated the tariff on Chinese goods to 145%, which was then quickly followed by China escalating their tariff rate to 125%, which took effect on Saturday. China has also halted exports of certain rare earth minerals, used procedural tactics to halt or slow the importation of US LNG, and halted purchases of Boeing airplanes.
Despite this escalation, we did see some signs from the White House of a bit of dialing back. Over the weekend, CBP exempted certain electronics and electronic components from the April tariff announcements (April 2, 8, and 9). The guidance includes exclusions for smartphones, computers, electronic devices and components, semiconductors, solar cells, flat panel displays, flash drives, memory cards and solid-state drives. This exclusion applies to three of the April EOs, covering the reciprocal countries listed on April 2nd and the additional China EO.
This announcement is significant for various reasons, but most notable is that it shows that the administration appears open to certain critical products being excluded across the board. However, there have been conflicting signals from the White House this week following the announcement. The White House has indicated that these products may be subject to an additional forthcoming “semiconductor tariff”. It will still be subject to the baseline 20% tariff for goods from China. We will have to wait and see if this is simply part of a larger negotiating strategy with China or firm policy.
The President has also indicated he may exempt some automakers and auto manufacturers from that sector’s April 3rd and forthcoming May 3rd tariffs. EWTC continues to advocate for a “critical energy security” exemption for materials and products vital to the energy supply chain. Should you wish to follow this issue closer please join our “Tariff Task Force” by emailing Tim Tarpley here.
Budget Reconciliation and Tax Moves Forward in the House
In the past few weeks, Congress has aimed to move forward on budget reconciliation and efforts to extend the expiring individual tax provisions under the Tax Cuts and Jobs Act. Both the Senate and the House have passed a unified concurrent budget resolution for FY 2025, a major step forward. This means that Congress can now begin the process of passing major elements of the President’s agenda with a simple majority in the Senate. This procedure is known as “budget reconciliation”. It is expected to be the only vehicle to pass much of the Republican agenda, given the close makeup of both the House and Senate. The effort has taken on significant urgency given the market uncertainty over the President’s tariff policy and the hope that extending the Tax Cuts and Jobs Act and expanding tax cuts would help calm investment markets and help restore faith in the President’s economic strategy.
With this in mind, Congress is aiming for late May or early June to publicly release the joint text of the reconciliation package with markup in House Ways and Means and Senate Finance during June. Under this timeframe, the final passage could come in mid to late July. This timetable is aggressive… and it is certainly possible that it could be pushed back into August or even September. Much will depend on what is included in the package and if the Republican caucus can stay unified, given the razor-thin majorities in both chambers.
In addition to tax reform, we expect much of the President’s energy policy to ride within this package. Permitting reform, codification of the EOs, and solidification of offshore and onshore leasing plans are all on the table for inclusion.
President Trump Issues EO Requiring Agencies to Sunset Regulations
Also of importance to our sector last week is the EO issued by President Trump directing the Environmental Protection Agency, Energy Department, Nuclear Regulatory Commission, Bureau of Safety and Environmental Enforcement, and Fish and Wildlife Service to amend regulations so that they expire in October 2026. The order applies to all regulations issued under things like energy appliance standards, mining and offshore drilling, as well as ESA. It is unclear if it could be applicable to the Clean Air Act, the Clean Water Act, or the Safe Drinking Water Act because the order directs each particular agency to provide the White House with a list of statutes that should be subject to the order. While this EO could potentially be quite impactful to our sector, it’s important to consider that there have been some legal concerns expressed about the order; however, until we see the regulations that are ultimately included by the agencies themselves, the relevance of this EO will be unclear.
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.
