Money & The Economy

Pipe Producers Challenge Claims That Steel Tariffs Will Harm Pipeline Industry

The American Line Pipe Producers Association (ALPPA), a domestic coalition of large diameter line pipe producers, vigorously challenges recent claims that U.S. pipeline developers are unable to source large diameter welded pipe (LDWP) for their projects domestically and that steel Section 232 tariffs imposed by President Trump are placing U.S. pipeline projects in jeopardy due to cost.

First, there is no merit to claims by U.S. pipeline developers and pipeline industry associations, such as INGAA and AOPL, that they cannot source their LDWP needs domestically. The U.S. LDWP industry is now operating at a capacity utilization rate of well under 40 percent – the lowest that it has been in years – and is ready, able and eager to supply any pipeline operator if given the opportunity to do so. As such, ALPPA strongly opposes requests from pipeline operators to be excluded from the steel Section 232 tariffs.

“U.S. producers can make virtually everything demanded for American pipeline projects, and they do so using domestic steel,” said Tim Brightbill, trade counsel to ALPPA. “Complaints by industry groups such as the Interstate National Gas Association of America (INGAA) and the Association of Oil Pipe Lines (AOPL) are completely unfounded. There is no reason why U.S. pipeline projects should not be using U.S.- manufactured large-diameter line pipe.”

Second, allegations that U.S. pipeline projects will be put on hold due to 232 tariffs are highly exaggerated.  While a tariff may increase the price of imported LDWP, it will not do so to the levels that pipeline operators are claiming as the cost for the pipes make up only around 20% of the total pipeline project cost.  These operators have continued to rely on imports and U.S. LDWP producers continue to lose bids, notwithstanding 232 tariffs. Pipeline projects continue to be highly profitable – much more so than the U.S. welded pipe manufacturers supplying them, who have been injured due to dumped and subsidized imports of LDWP.

As the President and Commerce Department correctly concluded after a 10-month investigation, U.S. producers of steel pipes are essential to U.S. national security and critical infrastructure, and are threatened by imports of these products.

In January 2018, ALPPA and other domestic producers filed antidumping and countervailing duty cases against dumped and subsidized imports of LDWP from six countries: CanadaChinaGreeceIndia, Korea, and Turkey. The International Trade Commission has already made a unanimous preliminary determination that the U.S. LDWP industry is materially injured or threatened due to these imports. Preliminary subsidy determinations are due later this month; preliminary antidumping determinations are due in August.

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Carl Fox

Carl Fox is the senior money and finance writer for Conservative Daily News. Follow him in the "Money & The Economy" section at CDN and see his posts on the "Junior Economists" Facebook page.

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