The United States could find itself with few friends in the Middle East if Republicans pass a border tax without carving out loopholes for oil imports, Helima Croft, RBC Capital Markets global head of commodity strategy, said Thursday.
The so-called border adjustment tax would put a tariff on imports, but not exports. That system would favor U.S. drillers and refineries set up to process American crude into gasoline and other fuels.
"I think the Saudi government is probably very happy with the Trump administration," she said. "This is the one issue where I think that you could really see a problem in the U.S.-Saudi reset relationship."
U.S. relations with Saudi Arabia deteriorated under the Obama administration, which brokered a historic deal with Riyadh's regional rival, Iran. That accord allowed Iran to expand its oil exports and relieved pressure on its economy.