A potential trade war and Russian meddling, not in an election, but to try to influence U.S. energy policies are all the rage in financial markets today. U.S. stocks plummeted after President Donald Trump slowed the market with the timing of his announcement that he would impose a 25% tariff on steel imports and 10% on aluminum. This undid the more balanced talk From Fed Chairman Jerome Powell who was bringing calm back to the markets in his testimony in front of Senate Finance committee by saying that there were no “decisive” signs of wage inflation, reducing the potential risk of a fourth interest rate hike this year. Yet, that risk of inflation would heat up again if the Trump tariffs start a trade war, as tariffs are inflationary and ultimately a tax on the consumer. Yet, in the big picture of the global economy, the impact might be small, but it is not the reaction that is the worry but the reaction from other countries as they start to retaliate.

If the tariffs are put in place it will raise the cost of production for oil. Steel is the most important metal for U.S. Energy production as it is used in every part of the industry from production, refining and processing and distribution of refined products. U.S. oil producers use types of steel that are not always produced in the United States. Types of Carbon Steel that reduce structural stress on pipelines and are more temperature resistant and less corrosive are cheaper to import. The tariffs will raise prices for oil, gas and other plastic products and could slow the countries booming oil production party.

Reuters News reported that Officials at the nation’s top energy industry trade groups issued statements urging Trump to reconsider the idea, and a source familiar with Exxon Mobil Corp’s investment plans said the tariff could lead the company to curtail an expansion of one of the country’s biggest refineries. Pipeline trade groups noted that the cost for specialized steel needed to build arteries that carry petroleum would rise. “We are urging the administration to avoid killing U.S. jobs through a steel tariff that impacts pipelines,” said Andy Black, CEO of the Association of Oil Pipe Lines (AOPL). A study by AOPL last year showed that a 25 percent increase in pipeline costs could increase the budget for a typical project by $76 million. TransCanada’s proposed Keystone XL expansion would cost at least $300 million more.