Chinese Tariffs Unlikely To Hurt US Energy: 4 Top Picks

The U.S. energy sector has been burgeoning lately. With rising oil prices and consistent efforts by the government to keep production high, gains for the space have been abundant. Experts are of the view that China’s tariffs on its natural gas imports from America will end up harming the world’s second largest economy more.

Moreover, energy production in the United States is expected to breach new records in the third quarter. Notably, the Energy Select Sector SPDR ETF (XLE) has gained 1.2% in the past 30 days. Under such encouraging conditions, investing in stocks from the space seems prudent.

Tariffs on U.S. Energy to Hurt China More

On Sept. 21, China imposed a 10% tariff on natural gas imports from the United States in a bid to hurt the U.S. energy sector. This came right after the Trump administration slapped tariffs of 10% on an additional $200 billion worth of Chinese goods.

On the face of it, the tariffs might seem disruptive to the growth of the U.S. energy sector. However, the fact that the current 10% level would be increased to 25% from Jan. 1, 2019 will lead companies in the United States to look for alternatives. Further, America does not export much to China because of the huge U.S.-China trade deficit.

Consequently, China stands to lose if it chooses to impose retaliatory tariffs on goods sourced from America. Further, economists opine that these tariffs could also cost the Asian giant about 0.6% of its GDP.

U.S. Energy Production to Hit Record High in Q3

Per the latest report by the American Petroleum Institute on Sep 24, third-quarter outlook for the U.S. energy industry appears encouraging. The report debunks claims that energy sector in America is likely to be hurt by trade war woes. It throws light on a very important fact that the country’s overall petroleum trade balance increased an impressive 56% in the last two months. The metric surged to 4.54 million barrels per day (MBD) in August from 2.9 MBD in June.

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William K. 2 years ago Member's comment

It certainly appears that president #Trump is primarily serving the interests of that top 1%, WHICH DOES NOT INCLUDE ME. I knew that this was what he would do, so I did not vote for him. But he is supposed to be working to serve the rest of us 99% folks.

Money Matters 2 years ago Member's comment

I may be generous in saying this, but perhaps Trump believes in trickle down economics. While I believe he's mostly self-serving, I think he really does believes that if business and the elite do well, they'll create jobs and an economic boon that all can benefit from.

I also think he believes that if he just hands out cash to the poorest Americans, the way may Democarats want, that it will be squandered on drugs, alchohol etc.

William K. 2 years ago Member's comment

Believing that something is true does not make that something true, just as wishing that it were true very seldom makes it true. Wishes are not always granted, I have observed.