Economics 101: tariffs

[timelets]

Americans consumers are going to pay for the steel tariffs at the pump:

Steel typically contributes up to 10% to 20% of the cost of drilling and completing an oil well, according to the Texas Alliance of Energy Producers. In turn, up to half of the specialized pipe and tubular steel products that the industry relies on are imported, according to the Independent Petroleum Association of America -- meaning energy companies will need to suck up nearly the entire 25% price increase, absent any tariff exemptions. U.S. steel prices, already among the highest of major economies, have risen by 20% since late February, when news of the planned tariffs first broke.

For pipelines, the situation is even worse: A 2017 study by consultancy ICF found that 77% of the steel used in line pipe was imported at an approximate cost of $2.2 billion in both 2015 and 2016, implying additional annual construction costs of about $550 million if the top line 25% tariff rate stays.

PD 8 June 2018
SN The Wall Street Journal