Trade War: Temporary Pause and Potential Sector Tariffs

On February 1, the White House declared a sweeping set of new tariffs: 10% on Canadian energy resources, 25% on all other Canadian goods, 25% on all Mexican goods, and an additional 10% on all Chinese goods (on top of 25% already incurred on most Chinese products).  Tariffs Fact Sheet  Executive Order  The definition of energy resources covers propane from Canada.

Just hours later, the Canadian government retaliated, slapping a 25% tariff on $155 Billion of American goods.  Mexican President Sheinbaum stated the country would implement tariff and non-tariff measures. 

On February 3, the White House, along with Canada and Mexico, announced a one month pause on all tariff action following concessions on border security.

Cross-border propane sales from Canada into the U.S. are $1.9 Billion annually, so a 10% tariff equates to $190 million each year.  And of course, parts and equipment for the industry are made in Canada, Mexico, and China.  In addition, parts and equipment are made in Europe and the President has made statements suggesting EU tariffs may be on the horizon.

The 30-day pause does not include the additional 10% tariff on Chinese goods.  China has stated they will file an action before the World Trade Organization and has initiated retaliatory tariffs of 15% on LNG and 10% on crude oil.  NPGA trade counsel has confirmed the Chinese tariffs do not cover propane.

In addition, the White House is continuing to analyze sector tariffs—these are not country-based tariffs, but rather tariffs on categories of product, regardless of country of origin.  Energy products have been mentioned by the President as on the list of potential sector tariffs.  The White House has indicated that it may announce sector-level tariffs on February 18.  These would be stacked with any country-level tariffs on the same goods. 

NPGA has sophisticated trade counsel that has been advising on numerous questions and is poised to seek exclusions should that process become available.  Trade counsel has already advised NPGA’s Propane Supply & Logistics committee and NPGA is currently scheduling a Zoom with trade counsel for NPGA’s Manufacturers section members.

NPGA will continue to advocate and educate across Congress and the Administration alongside our partners, including the Canadian Propane Association (CPA) and like-minded industries as the trade war continues.  A joint NPGA-CPA statement is available for dissemination. 

Tariffs action will continue to evolve and NPGA will continue to relay information to the industry.  For questions, please contact NPGA President and CEO, Steve Kaminski.