Energy weapons
Trump’s proposed trade war threatens to set off a grenade in our own foxhole.
Hypersonic weapons, nuclear-powered missiles and an “invincible” ICBM were among Russian President Vladimir Putin’s boasts (and bluster) of strength during his annual state of the nation address last week.
Don’t be distracted by these CGI models. The real threat the West needs to worry about is an energy weapon — the Nord Stream 2 pipeline.
That 500-mile long pipeline will bring natural gas from the Russian stateowned company Gazprom into Germany. If completed, the project will make the European Union more reliant on Russian exports while circumventing Ukraine’s gas transit fees.
Without firing a shot, Putin will accomplish his foreign policy goals of bringing the EU into the Russian sphere of influence while punishing Ukraine for seeking closer relations with the West.
So how is the United States responding? While Putin rolls out the equivalent of an economic superweapon, Donald Trump is setting off a grenade in our own foxhole.
The White House continues to promote a 25 percent tariff on steel and a 10 percent tariff on aluminum. Those trade barriers are supposedly aimed at China, but in reality are going to hit allies like Canada, Mexico, South Korea and Brazil. And Trump has threatened tariffs against European cars next.
Plenty of presidents have implemented niche tariffs to punish nations that cheat trade rules — targeted strikes. Trump’s plan is just carpet bombing, and Houston is expected to take plenty of collateral damage.
Our oil and gas industry relies on speciality valves and other equipment that are only manufactured abroad. Pipeline-grade steel is a specific market that also relies on imports.
At a time when frackers should be popping champagne over $60-per-barrel oil and growing demand, Trump’s trade barriers threaten to weigh down an industry that still needs to build pipelines and processing plants to keep up with production.
The news has even sent a slight chill through the annual CERAWeek by IHS Markit conference that Houston is hosting this week.
The event’s opening day was marked by a warning from Plains All American Pipeline CEO Greg Armstrong that the tariffs could hurt expected infrastructure investment.
The United States is on the verge of becoming a net oil exporter and dominant player in natural gas. The industries have overcome technological hurdles, trade obstacles and a longtime ban on crude exports. Now we have to deal with the White House threatening to wage a trade war that treats a port city like Houston as an acceptable loss.
If Trump really wants to show some national strength, he’ll try to win the fight for global energy markets. That means dropping the tariff talk and expanding market access, building infrastructure, promoting integration with Canada and Mexico, rejoining the TransPacific Partnership and restarting negotiations on the Transatlantic Trade and Investment Pact.
Missiles might make for a good parade or CGI show, but the real geopolitical battles are being fought with energy weapons — and it is time for ours to be unleashed.