NEW YORK – Oilfield service providers are expected to face modest earnings impacts from U.S. President Donald Trump’s decision to impose tariffs on steel imports, according to Liberty Energy Chief Executive Ron Gusek. Trump imposed 25% tariffs on steel and aluminum on March 12, with additional tariffs potentially coming on April 2. A Dallas Federal Reserve survey revealed that executives are concerned about the tariffs driving inflation in the oilfield and increasing drilling costs.

The tariffs have already led suppliers to raise costs on certain fracking components, such as perforating guns used in the fracking process. Gusek, who assumed the CEO role at Liberty after the former CEO was confirmed as U.S. Energy Secretary, stated that Liberty is passing these increased costs on to its customers.

“As we receive a letter indicating that costs will rise, we share that letter with our customers and ask them to absorb that cost,” Gusek explained in a telephone interview. This cost pass-through could further impact Liberty and other oilfield service providers’ earnings by forcing their oil-producing customers to reduce drilling activity. Oil producers have already set their annual budgets, so they may slow drilling to balance expenses as costs for items like well casing and tubing increase.

One executive quoted in the Dallas Fed survey noted that the Trump administration’s tariffs had immediately raised costs for casing and tubing by 25%, warning that the knock-on effects would force producers to reduce drilling rigs and decrease employment. Gusek does not currently expect a slowdown in activity, citing guidance from Liberty’s customers indicating a 2-3% hike in well completion costs. However, industry costs are rising, and Liberty aims to offset these increases by enhancing operational efficiency, such as completing wells faster.

“Hopefully we can offset that, and the end result for our customers on the E&P side is that we can get somewhere close to holding well costs flat, even in the face of that bit of inflation.”