Analysis by Energy Workforce President Tim Tarpley
As members headed back to Washington this week, a number of policy debates important to the energy services sector are front and center. Given the razor-thin majorities in both the House and Senate, the majority of major energy and tax policy action that our sector has been watching will likely have to ride in that passage. Such a maneuver will mean that the package could pass with only a simple majority in the Senate as opposed to a 60-vote threshold that would be required without it being included in reconciliation.
One issue of particular importance to this sector is the debate over the IRA tax credits and whether or not they will survive the reconciliation bill. Lines appear to be drawn, and a war of words has begun with two warring GOP factions both indicating they may not vote for the final package unless the credits are stripped or retained. The first faction is the House Freedom Caucus, which has taken the position that they may not vote for final passage if the IRA is not fully repealed in the reconciliation process. Republican Chip Roy said this week: “If Republicans are going to refuse to repeal the Inflation Reduction Act, they are not going to get a Republican tax bill through the House…..It’s costly, it’s inflationary, and we should repeal every dollar of it.” This group argues that they need to repeal the credits (which may cost around $851 billion between 2034 and 2034 according to an analysis from the Tax Foundation) in order to help offset the potential new spending in the rest of the bill. There are 35 members of the Freedom Caucus, although they do not always vote in a block, and not every member has yet to be on the record on their position.
On the other side of the battle on Sunday, 21 House Republicans, led by New York Republican Rep. Andrew Garbarino, wrote (include link) a joint letter to House Ways and Means Committee Chairman Jason Smith urging him to preserve the energy tax credits in the IRA. Garbarino said, “We have 20 plus members saying Don’t just think you can repeal these things and have our support…..we need these projects that are currently under development to be brought online so we can continue the President’s America First agenda.” The 21 signers appear to be enough to get the Speaker’s attention, as his majority in the House is far smaller than this. However, it is important to note that the actual letter itself did not use language that bound the signers to not support the package should the credits ultimately be pulled; the language was much softer than this.
How this all ultimately plays out is still unclear. Ultimately, it will depend on which side is willing to hold firm and actually vote against such a large, important package on this single issue. It is important to remember that a compromise could also be reached with both sides, where some credits are removed but others remain or are altered. Lobbying for both sides of the issue are working the halls of Congress closely over the next few weeks.
April 2nd Tariff Target Day Grows Closer
Although the President continues to refer to the April 2nd deadline as the date for action on tariffs, both the President and some of his advisors appear to be walking back how significant the day will in fact be. During the Friday press conference last week, the President said that there will be “flexibility” on his tariffs, and the Wall Street Journal reported that the April 2nd day will not include direct sector targeting tariffs like chips and cars. He also said “he may give a lot of countries breaks,” but did not provide details beyond that. Additionally, Secretary Bessent indicated last week that the big action will be that the White House will send a “number that we believe represents their tariffs” to all trading partners. In addition to April 2nd being the date targeted for the reciprocal action, it is also the date that the last exemption on the 25% tariffs on Canada and Mexico will expire. There has been less focus on this aspect by the administration in recent days. These statements created a bit of a market run in the past few days, making up some, but not all, of recent losses. A true country-by-country reciprocal tariff plan would require about 2.5 million individual tariff rates, so it could be quite complex.
On Monday night, President Trump also introduced an EO that mandated that on April 2nd, the United States would impose a 25% tariff on all imports from any country that either indirectly or directly imports Venezuelan oil.
EWTC continues engagement on this critical issue for our sector, leading a joint trade letter to Commerce last week and continuing to have critical conversations with both Congress and the Administration. EWTC is also hosting a tariff task force to follow the issue and coordinate sector responses. Should you be interested in joining this task force, please email Tim Tarpley here.
Tim Tarpley, Energy Workforce President, analyzes federal policy for the Energy Workforce & Technology Council. Click here to subscribe to the Energy Workforce newsletter, which highlights sector-specific issues, best practices, activities and more.
