The Trump administration is turning toward the most well-worn pages of its global playbook -- tariffs and threats --as it tries to stop an oil-price war from crippling dozens of U.S. companies, as reported by Dow Jones Factiva.
In conversations with oil-company executives and lawmakers, President Trump has suggested tariffs on imported oil, possibly using the same trade law he used against China, according to people familiar with the matter. The tactic is aimed at leveraging U.S. power to get Saudi Arabia and Russia to reduce a flood of crude swamping the market.
The Saudi-led Organization of the Petroleum Exporting Countries and allied nations including Russia are set to hold a video conference Thursday to negotiate an accord on production cuts.
The U.S. contends market forces will curb production. It is resisting pressure to mandate cuts for its oil producers,and isn't planning to have a representative participate, the people said. "I would use tariffs, if I had to," Mr. Trump said Sunday. "I don't think I'm going to have to."
The people cautioned that Mr. Trump could abandon the idea of tariffs if a deal is struck or if crude prices -- down about 60% for the year -- otherwise rebound. They had bounced back strongly last week as the Trump administration touted a potential deal between Moscow and Riyadh, but heavy losses Monday and Tuesday erased nearly all of those gains.
Tariffs are the likely contingency plan if the trouble persists, the people said, and just threatening them is a way for Mr. Trump to find leverage in a diplomatic push.
"Tariffs are one of the president's favorite tools, and he's got a lot of authority over them," said Sen. Kevin Cramer (R., N.D.), who has consulted with Mr. Trump on the oil crisis.
The people familiar said the administration was considering using Section 301 of the 1974 Trade Act, which it used to impose tariffs on Chinese imports. The act gives the president broad powers to initiate a trade case against unfair foreign barriers to U.S. exports and enact tariffs if a settlement can't be reached.
Harold Hamm, executive chairman of shale-driller Continental Resources Inc., has vocally pushed for trade investigations of the Saudis, saying they are unfairly dumping cheap crude onto markets.
One person familiar with the president's thinking says tariffs under Section 232 of the Trade Expansion Act of 1962 have also been discussed. That measure gives the president wide discretion and the potential to act quickly if the administration determines national security is at stake.
Mr. Hamm and many oil producers have been lobbying the Trump administration for help since the collapse of the Saudi-Russia alliance last month. Crude prices had already started a plummet as the coronavirus pandemic slowed the economy and shrank demand, and U.S. companies came into the crisis mired in heavy debt.
Trump administration officials consider federally mandated cuts or even a passive endorsement of U.S. output cuts to be a third-rail, government overreach into private enterprise.
While less extreme than production cuts, tariffs are unpopular with a swath of the industry, which has historically championed a free-market approach to oil. The two largest U.S. oil companies, Chevron Corp. and Exxon Mobil Corp., have lobbied against any oil-market intervention.
"Low tariffs are what's best for our globe and our business in the long term," Exxon Chief Executive Darren Woods said Tuesday.
On Tuesday, an arm of the Energy Department released an estimate that domestic production of crude oil will fall 13% by year's end. Administration officials plan to use that government forecast as evidence to Russia and Saudi Arabia that U.S. cuts are coming, a senior administration official said.
