Trump's tariff reversal may reduce costs for US energy companies, but it will likely not affect broader flows.

Although the U.S. Supreme Court’s decision to overturn trade tariffs that President Donald Trump imposed last year could ease costs for certain?oil drillers and producers, analysts and experts said that energy flows in general would?remain unchanged for now. The ruling of the court could lower the cost to build LNG plants and large-scale infrastructures that depend on modules and parts made in countries affected by tariffs. Venture Global, for instance, builds its LNG plant components in Italy and then imports them to the U.S.A. for final assembly. Trump's tariffs increased costs for U.S. oil producers and service providers up the value-chain, affecting imported equipment and materials. Some companies absorbed these additional costs; others passed them onto their customers.

Venture Global has not responded to an immediate request for comment.

Cam Hewell is the president and CEO at Premium Oilfield Technologies. The company manufactures and sells equipment and spare parts to oilfield companies.

"We had about 90% of the tax hike to absorb, so there won't be a huge impact on our prices. It will also free up cash for employee raises and research and development.

Kirk Edwards of Texas-based Latigo Oil said that the ruling could also help companies better budget and understand drilling costs.

The Supreme Court's ruling did not remove the 50% tariffs on aluminum and steel imposed last year. Some executives are still concerned that the administration may find a way to keep tariff costs.

Hewell stated, "I am afraid that the administration may bypass Congress quickly and create another tariff scheme similar to the current one... and never change the amount we are required to pay."

Trump himself suggested this, saying that he would impose 10% tariffs on all goods for 150 days.

Trump stated, "We have great alternatives."

LNG FLOWS ARE LIKELY NOT TO BE CHANGED

Ira Joseph is a senior researcher at Columbia University’s Center for Global Energy Policy. He said that while the ruling of the court will theoretically lower the cost of building LNG plants, this is unlikely to lead China to import more LNG. This is due to simple economics.

Joseph stated that it was more sensible for China to import oil-indexed LNG cheaper from the Middle East or continue trading on U.S. LNG with Europe. "Beijing treats its LNG market now as strategic leverage in the U.S. and no LNG purchase was agreed as part of the deal last year. Beijing is unlikely offer any purchases or concessions even if the tariffs have eased," said Alex Munton. Director of global gas and LNG Research at Rapidan Energy.

Samantha Santa Maria Hartke, Vortexa's head of market research, said that "if this administration has proved anything, it's its resourcefulness in trying to achieve?its goals, they will seek alternative options." She added that China would not change its mind about stopping the delivery of U.S. LNG and crude oil after it imposed retaliatory duties against the U.S. (Reporting from Georgina McCartney in Houston, Arathy Sommesekhar and Curtis Williams; Editing by Nathan Crooks & David Gregorio).

(source: Reuters)