How Has the US-China Trade Dispute Affected Oil Pipelines?

For years, America and China, two of the world's biggest economies, have been engaged in trade tensions. In early 2018 the dispute took a turn for the worse, with the World Trade Organisation warning that "tit-for-tat tariffs" could soon trigger higher levies on hundreds of billions of dollars in bilateral trade and investment between the two economic superpowers. Some experts even warn that the economy could be on the brink of a US-China trade war.  

Beijing turns up the heat

While Trump has become notorious for his brash, hard-handed approaches, the latest developments suggest that Beijing isn't afraid to turn up the heat on the controversial US president. So far, it's slapped tariffs on almost 130 US products, worth a collective US$3 billion. This includes a 15% tax on steel and alloy which is primarily manufactured along the Texas Gulf Coast.

The taxes were a retaliatory move triggered by similar tariffs the US imposed on Chinese steel and aluminium. They saw the market hit with a 25% tariff on steel imports and 10% on aluminium, which Trump marketed as a strategy to "address unfair global practices" and safeguard American industries. With the US importing around three-quarters of the steel used in its oil and gas pipeline projects, China could see a big impact on its bottom lines.

WTO warns of “domino effect”

With the trade dispute between the United States and China rapidly escalating, investors are worried that the turbulent economic climate could drag down America's steel and aluminium industries. Not only will the tariffs affect steel and aluminium manufacturers, but if the trade war intensifies it could see China target broader energy related machinery classes

Roberto Azevedo, head of the World Trade Organisation has warned that the simmering competition between the US and China could trigger a “domino effect” that could ultimately slow down markets and impact both the American, and the global economy.   

“A cycle of retaliation is the last thing the world economy needs,” stresses Azevedo. Christine Lagarde, managing director of the International Monetary Fund (IMF) agrees, warning that “darker clouds” are closing in over the world economy. “Governments need to steer clear of protectionism in all its forms,” she urged in a recent speech given in Hong Kong. “History shows that import restrictions hurt everyone.”

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