Companies Get First Tariff Waivers, but Many More Are Left in Limbo
Posted June 22, 2018 8:23 p.m. EDT
WASHINGTON — The Trump administration granted seven companies the first set of exclusions from its metal tariffs this week and rejected requests from 11 other companies, as the Commerce Department began slowly responding to the 20,000 applications that companies have filed for individual products.
The Commerce Department announced Wednesday that it had granted exclusions from the 25 percent steel tariffs to seven companies that requested an exemption for 42 products sourced from Japan, Sweden, Belgium, Germany and China. The companies included the razor maker Schick Manufacturing and Nachi America, which makes cutting tools, bearings and hydraulics.
But the department denied 56 products, from companies that included Seneca Foods, a fruit and vegetable producer; Bekaert, a maker of steel wire; and Mills Products, a metal fabricator. Some businesses, such as Primrose Alloys, a metals trading company, and Wright & McGill, a maker of fishing gear, were denied several applications.
Some applications, like those of Seneca and Mills Products, were rejected because they were deemed incomplete, according to decision memos posted online. But several companies whose applications were denied faced objections from U.S. steel-makers.
Nucor, a U.S.-based steel company that has supported the tariffs, argued against Bekaert’s request for an exclusion for wire rod that it uses to produce cord that goes in tires. Nucor said Bekaert had access to enough of the rod without requiring an exclusion.
The Trump administration imposed sweeping tariffs on imported steel and aluminum in late March but promised to fine tune the process by allowing companies to apply for exemptions for products that were not readily available in the United States.
While companies say they still have uncertainties about the requirements for exemptions, many of the approvals and denials have so far appeared to come down to whether an American steel or aluminum manufacturer objects to the request. If a U.S. company opposes a request, the Commerce Department is more likely to reject the application, according to Wilbur Ross, the commerce secretary.
Ross said in an interview Thursday that he expected the majority of requests that the department had received to be denied, since many of them were not based “on the idea that the products are not really available.”
“Many of the requests are effectively requesting relief simply because the product prices are higher than they would be with the imports, and that’s not a sufficient reason to grant the exclusions,” he said.
U.S. Steel, which said it was restarting idled furnaces around the country in response to the tariffs, has filed objections against a slew of companies seeking exclusions, sometimes opposing dozens of requests from the same source. In most filings, U.S. Steel said it was capable of producing the metal for tubing, casing, piping and sheeting that companies asked for permission to import.
The Commerce Department must still deal with nearly 20,000 petitions in its queue. While the administration has said the exclusions are an effective way to ensure the fairness of the tariffs, companies that have applied for the exclusions criticized the exercise as both long and disorganized.
“This is the most screwed-up process,” said Mark Mullen, president of Griggs Steel, a steel distributor in the Detroit area. “This is a disservice to our industry and the biggest insult to our intelligence that I have ever seen from the government.”
Mullen has made 90 requests and has not been told the status of any of them. He is waiting to submit 2,000 more requests, “but they take so damn long,” he said.
As the chaotic exclusion process continues, Trump is expanding his trade efforts on multiple fronts, threatening tariffs on up to $450 billion of products from China and roughly $350 billion of imported autos and auto parts.
Although the president has famously said trade wars are “easy to win,” the lingering difficulties of the steel and aluminum tariffs, which were put into place three months ago, show the inevitable complexity of trying to reshape the rules of global trade in a matter of months.
The handful of companies that have received exclusions to the tariffs are so far pleased. Bill Brebrick, the U.S. sales manager at Zapp Precision Wire, which was granted an exclusion for a zinc-coated flat-rolled wire that it produces in Germany, said the outcome had shown him “that the system’s working.”
Brebrick said he filed a request for the exclusion months ago, along with roughly 60 others for various products that he has not yet heard about. The Commerce Department did not inform him that his request had been granted. Instead, he found out by checking for updates online every day.
“This has been a very frustrating saga for us,” said Todd Adams, the vice president of Stainless Imports in Florida, after a reporter informed him Friday that his application had been denied with no reason provided.
Last summer, the company landed an order worth several million dollars from a Midwest dairy company. Adams was asked whether his company could provide stainless steel tubes with unusual dimensions. He eventually found a Chinese supplier and was at a port inspecting the first two containers when he heard about the Trump administration’s tariff plan.
“This is a personal hit,” he said, likening the payment of hundreds of thousands of dollars in tariffs to a ransom for his own products.