The escalating trade row between the US and China is hurting the American energy sector. Photo: iStock
The escalating trade row between the US and China could intensify over Iranian fuel sales. Photo: iStock/Getty Images

As the trade row between the US and China escalates, Beijing is preparing retaliatory tariffs targeting energy, one of America’s most lucrative export sectors.

Sales of American oil, gas and coal to the Asian giant have been increasing, so much, in fact, that the US energy sector has been running a bilateral trade surplus. However, the majority of those exports (not including liquefied natural gas) face being hit with a 25% Chinese tariff, which would be part of a second set of duties Beijing threatened to levy last week.

The move will likely reduce the profits of US oil producers. They will be able to sell it elsewhere, but will likely have to accept discounts to find new buyers. It remains unclear when and exactly how the new tariffs willl take effect.

Aaron Padilla of the American Petroleum Institute (API) said the duties on US steel imports imposed by the Donald Trump administration in March had increased costs for energy companies, as they buy products from China such as parts for offshore facilities.

Padilla said the API was talking to the Trump administration about its concerns. “We want them to understand that the tariffs have a negative impact on the US oil and gas industry,” he said. “You can’t be promoting and maximizing the production of energy while also imposing tariffs.”