Analysis by Energy Workforce President Tim Tarpley
On Monday, President Trump released details of his plan to delay the implementation of new reciprocal tariffs until August 1st, from the previous deadline of July 9th. An Executive Order formalized the new tariff rates and deadline. At the same time, the President indicated that for countries that are either negotiating in good faith or have signed the initial phases of an agreement, the rate will remain at the rate from that agreement or the base 10% rate while negotiations continue.
In addition to the Executive Order, the President began sending letters to countries that he felt were not meeting his expectations regarding negotiations, moving many of them back to the originally announced (or close to) reciprocal tariff rate. The President made it clear that he intends these letters only to represent the first part of a longer list. The countries targeted so far are:
-
- Japan (25%)
- Korea (25%)
- South Africa (30%)
- Kazakhstan (25%)
- Laos (40%)
- Malaysia (25%)
- Myanmar (40%)
- Tunisia (25%)
- Bosnia and Herzegovina (30%)
- Indonesia (32%)
- Bangladesh (35%)
- Serbia (35%)
- Cambodia (36%)
- Thailand (36%)
The U.S. is a major buyer of cars, machinery and electronics from Japan and South Korea. Kazakhstan exports crude oil and metal alloys to the US, Malaysia sells electronic components to America, and South Africa largely sends precious metals. Key US imports from Laos include optical fibers, glasses and clothing, while Myanmar’s largest export category is mattresses and bedding.
The imposition of these tariffs is in addition to other tariffs (such as 232), and the President indicated that in the case of transshipping, the higher tariff rate will apply. The letters also indicated that if any country receiving the letter raised its own tariff level on US goods, the US would in turn raise the level on that country by 25%. These new levels are in addition to the Section 232 tariffs on steel and aluminum (and derivatives) for all countries, except the UK. We expect additional guidance from Commerce soon on the process they plan to implement to address the numerous petitions for 232 derivatives to be added to the 232 lists.
Reconciliation Bill Passes Both Chambers and Signed Into Law
After some back-and-forth between members, the “Big Beautiful Bill” passed the House on Wednesday with a vote total of 218-214. This was the final step needed for final passage after many months of work. All but two Republicans, Thomas Massie and Brian Fitzpatrick, ultimately supported the legislation.
The legislation includes several provisions that are particularly important for our industry. First, the legislation establishes a predictable and stable lease process for both offshore and onshore production. This will enable production companies to plan ahead for years and secure long-term investments for drilling on public lands and waters. Additionally, the legislation delays the implementation of the “methane fee” for 10 years. While not a full repeal that we had hoped for, this significant delay is nearly as good. Investment in the industry will also expand bonus depreciation and accelerated expensing for capital equipment.
Also notable were several changes to the tax credit structures for energy production and manufacturing. The 45Q tax credit for carbon capture remains in place and will be eligible for projects starting construction before 2033. The 45X credit remains and begins to phase out in 2030 at 75%, then decreases by 25% intervals until it is fully phased out in 2032. The final bill language extends the 45Y production tax credits for zero-emission electricity generation, including battery storage, advanced nuclear, geothermal, and hydropower projects, until 2036. These credits are fully available if construction begins before 2034, with a gradual phase-out starting in 2034 and ending in 2036. Wind and Solar tax credits also received a much shorter window thanthan current law,, with a requirement to begin construction within one year from enactment and be placed in service by 2027 after a last-minute amendment in the Senate, Hydrogen got a bit of a reprieve with an extension of the 45V tax credit to the end of 2027 to begin construction. While shorter than the original IRA timelines, this does give projects a chance at construction. Nuclear (45U) remains unchanged at the end of 2032.
While many of the permitting reform provisions were struck down by the parliamentarian, with the BBB now cleared from the congressional calendar, we hope that Congress will move to pass a comprehensive permitting reform package. EWTC and our allied trades will begin to focus on this next legislative goal in the coming weeks and months.
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.
