China slaps tariff on U.S. oil pipe, potential hit to Texas industry

**FILE** Workers check pipelines at the Alashankou Oil Transporting Station, 2.5 kilometers (1.6 miles) away from the Alashankou Port of China, in readiness to receive crude oil from Kazakhstan through the Kazakhstan-China Oil Pipeline in Bole, western China's Xinjiang province, in this June 19, 2006 file photo. (AP Photo/Color China Photo, file) **CHINA OUT** less **FILE** Workers check pipelines at the Alashankou Oil Transporting Station, 2.5 kilometers (1.6 miles) away from the Alashankou Port of China, in readiness to receive crude oil from Kazakhstan through the ... more Photo: AP Photo: AP Image 1 of / 1 Caption Close China slaps tariff on U.S. oil pipe, potential hit to Texas industry 1 / 1 Back to Gallery

WASHINGTON - Texas manufacturers who produce steel oil and gas pipelines and drill pipe are expected to see a relatively modest impact from China's announcement it was slapping a 15 percent tariff on steel pipe from the United States.

Last year the United States exported 832,000 metric tons of steel pipe, according to the U.S. International Trade Administration. More than 80 percent of that pipe went to Canada and Mexico, with China coming in a distant third.

"Bottom line, if the retaliation is on pipelines, Houston will not see much impact. However, if the trade war escalates to broader energy related machinery classes, then Houston will be more exposed," said Praveen Kumar, executive director of the University of Houston's Gutierrez Energy Management Institute.

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The steel pipe tariff is part of a sprawling $3 billion tariff imposed by the Chinese early Friday, in response to President Donald Trump's announcement he would enact tariffs targeting $50 billion in Chinese goods. Among the U.S. goods targeted by the Chinese are pork, apples and steel pipe, but officials in Beijing are believed to be considering further action depending on the economic impact of Trump's tariffs.

Pipeline manufacturing has grown in Texas over the past decade, as the hydraulic fracturing boom took off in shale plays like the Eagle Ford and Permian Basin. In November, global steel pipe giant Tenaris began production of steel oil and gas pipe at its new $1.8 billion mill in Bay City, destined for shale oil and gas wells in Texas, Oklahoma and beyond.

"There is definitely a fair amount of the pipe manufacturing that gets done here," Kumar said. "It makes sense. Some of the biggest [steel pipe] buyers are in the Houston area, like Schlumberger, and the pipeline companies."