There’s a ‘tsunami’ of companies applying for relief from Trump’s steel and aluminum tariffs

April 16, 2018 - How far the Trump administration will go to protect America’s steel and aluminum industries now rests largely in the hands of Commerce Department officials, who face a flood of applications from American companies seeking exemptions from President Trump’s newly imposed tariffs.

Commerce Secretary Wilbur Ross and his team must determine which U.S. companies get a waiver and which ones have to pay the border taxes to bring in metals from countries as diverse as Switzerland, Japan, Turkey, Russia and China.

More than 1,200 applications for waivers from the steel tariffs and 125 requests for exemptions from the aluminum tariffs have come in so far, the Commerce Department confirmed Friday to The Washington Post, an early indication of pressure building on Trump to back off on additional tariffs and lower the import taxes that are in place. The tariffs have only been in place for three weeks, and many lawyers and business leaders involved in the steel industry say this is just the beginning of the push for greater exemptions.

“A tsunami is coming,” said Kevin Dempsey, general counsel at the American Iron and Steel Institute. “I anticipate there will be several thousand exclusion requests filed.”

Each exemption provides relief to a U.S. business, but it also waters down the effectiveness of the tariffs, which Trump said are necessary to protect and rebuild America’s steel and aluminum industries.

Trump put tariffs of 25 percent on steel imports and 10 percent on aluminum imports, but he quickly excluded several countries from the tariffs, significantly weakening the impact. If the Commerce Department grants hundreds — or even thousands — of company waivers, that would further dilute the tariffs. 

The only reason the Commerce Department is supposed to grant companies waivers is if a certain steel or aluminum item they need cannot be made anywhere in the United States. Businesses applying for waivers from the tariffs argue that they need a highly specialized item not made domestically, but the Commerce Department has wide latitude to make the call if that is truly the case.

When President George W. Bush put a similar tariff on steel in March 2002, his Commerce Department granted waivers to import over 700 foreign steel products by August (and Bush removed the tariffs entirely by December 2003). It’s unclear how generous the Trump administration will be this time around.

With surge in applications, the Commerce Department is trying to hire additional staff to process them. Only a few dozen applications out of the more than 1,000 that have been submitted have been posted online for the public to review for a month, the next step in the exclusion process that gives domestic steel and aluminum producers a chance to object and say they can make the part in the United States.

As the Commerce Department tries to bulk up its staff, there’s a job posting on for an “evaluator” to help review documents, but it’s expected to be a tough job to fill because it requires a lot of technical knowledge about metal rods, plates, bolts, wire and more.

The steel and aluminum tariffs affect companies large and small, from international oil pipeline makers such as Borusan Mannesmann to the owner of 7A Ranch in Wimberley, Tex., who is building a train for kids to ride at his resort.

“This is the first time I have ever imported anything, let alone steel,” said Scott Way, owner of 7A Ranch, a family resort that re-creates a 19th-century pioneer town.

One of Way’s favorite childhood memories was riding an old steam train at 7A Ranch. When he bought the resort in 2015, the train was in disarray, but he resolved to restore it (with some modern touches, including a gas engine). He says he looked all over the United States for steel rail for the small train, but couldn’t find any and ended up ordering from China. He signed the contract for the rails in February, just days before Trump announced the steel tariffs.

“I’m crossing my fingers I’ll get an exemption,” Way said.

Trump has already granted sweeping waivers from the tariffs by exempting Canada, Mexico, South Korea, Argentina, Australia, Brazil and countries in the European Union. Those nations account for 63 percent of U.S. steel imports, said Chad Bown of the Peterson Institute for International Economics, but the country exemptions last only until May 1. It’s unclear whether Trump will extend them. Currently, the nations affected the most by the steel tariffs are Russia, Turkey and Japan.

Applications are expected to skyrocket if some countries don’t get permanent exemptions from the tariffs. Canada is the top source of metal imported to the United States, and there would be significant disruption to many supply chains if it ended up on the tariff list.

“Trump’s creating chaos and uncertainty on trade,” said Eric Altbach, senior vice president at the Albright Stonebridge Group and a former deputy assistant U.S. trade representative for China under Obama. The Trump administration “believes this will motivate U.S. companies to locate more of their supply chain in the United States.”

Some argue the process is too hard for small companies without armies of lawyers.

“The exclusion request process lacks transparency and will be particularly burdensome for smaller manufacturers. It is unbalanced and appears to not allow for successful outcomes for downstream users,” Ann Wilson, vice president for government affairs at the Motor & Equipment Manufacturers Association, told Congress at a hearing on Thursday.

But two business owners who have submitted applications told The Post that the Commerce Department has been responsive and even called them to talk it through or point out mistakes.

The earliest any waivers would come would be the end of April after the 30-day window ends, and Ross can make a final decision. If a waiver is granted, it would be retroactive back to the first day the tariffs went into effect in late March, meaning a company such as 7A Ranch could get a refund for paying a tariff right now.

A Commerce Department spokesman said the department welcomes comments from the public and has dedicated phone numbers and emails where businesses can get help with their applications with waivers.

“These procedures will allow the Administration to further hone these tariffs to ensure they protect our national security while also minimizing undue impact on downstream American industries,” Ross said in March.

Source: The Washington Post