Steel tariff adds $40 million tax to energy pipeline project

NEW YORK (Bloomberg) -- The Trump Administration should exempt from its tariffs materials needed to build energy pipelines, allow steel orders already made to stand unchallenged and limit further levies until companies can get steel made in the U.S. to the precise specifications needed.

That’s the message Willie Chiang, COO at Plains All American Pipeline LP, carried to the U.S. Congress Tuesday in comments before the House Ways and Means Committee. The company’s request for an exemption from U.S. steel tariffs in its push to build a pipeline in the biggest North American oil field was rejected in July by the U.S. government.

The ultimate cost of the rejection: Roughly $40 million, said Chiang, calling it a “‘tax.” While the pipeline project will go forward, he said the financial impact for both the company and the industry is worrisome, mirroring comments made by the company last month.

Plains sought the exemption for high-grade steel from Greece as it prepares to begin building the 585,000 bpd Cactus II pipeline which is scheduled to start shipping crude from the Permian Basin in West Texas and New Mexico to the coastal port of Corpus Christi, Texas, late next year.

“Clearly, grandfathering is what we asked for,” he said. “We can’t let trade officials determine product specification for companies. It’s our pipeline, it’s our asset."