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Admin Waived Steel Tariffs for Some 02/15 06:43
WASHINGTON (AP) -- Despite President Donald Trump's tough talk on trade, his
administration has granted hundreds of companies permission to import millions
of tons of steel made in China, Japan and other countries without paying the
hefty tariff he put in place to protect U.S. manufacturers and jobs, according
to an Associated Press analysis.
The waivers from the import tax show how pliable his protectionist policies
can be. Trump has positioned himself as an "America First" trade warrior, using
tariffs as a club against countries he's accused of playing unfairly. Although
China has been the principal target of Trump's ire, he also has criticized
Japan and American allies in Europe.
Behind the scenes, however, his Commerce Department approved tariff
exemption requests from 370 companies for up to 4.1 million tons of foreign
steel, with roughly 8 percent of the total coming from China and close to 30
percent from Japan, according to AP's review of thousands of applications for
relief from the import tax on steel. Many recipients of the waivers are
subsidiaries of foreign-owned businesses.
Although Trump has sought to rebuild America's steel industry by curbing
imports, tariffs are fraught with economic risk --- a message that came through
loud and clear in many of the waiver applications. Companies that use steel in
their products warned the Commerce Department that the 25 percent tariff could
do serious damage to their businesses.
The numbers also provide a window into a steel tariff exemption program that
has vexed many applicants as well as lawmakers who've questioned the pace,
transparency and fairness of the process. The flood of applications overwhelmed
the system the department set up nearly a year ago to review them, and more
than 38,000 requests still await rulings.
The Commerce Department has received waiver applications from 45 states and
Puerto Rico, evidence of the geographic range of companies angling for
exemptions.
Tioga Pipe in Philadelphia, which supplies a variety of industrial customers
with pipe, fittings and flanges, received approval to import as much as 86,500
tons of Chinese steel duty free; that was the most of any company with approved
waivers. Tioga did not return calls and emails seeking comment, but its
applications indicate the material isn't available from domestic suppliers in
the sizes and shapes it needs.
DS Containers, a subsidiary of Japan's Daiwa Can, makes aerosol and liquid
pour cans at factories in Illinois using laminated tin-free steel that U.S.
suppliers have shown no interest in manufacturing, CEO Bill Smith told the
Commerce Department. Smith received the go-ahead to import up to 390,000 tons
of the material from Japan, the Netherlands and United Kingdom. If the waivers
had not been granted, Smith warned, DS Containers might have been forced to
shut down production lines or lay off employees.
A 25 percent tariff "is a very heavy burden on any company," Smith told AP
last year.
The department declined interview requests. A spokesman said in an emailed
statement that exemptions can be approved if the department determines the
metal "is not produced in the United States in a sufficient and reasonably
available amount or of a satisfactory quality or should be excluded based upon
specific national security considerations."
Overall, the department has so far approved nearly 14,000 requests for
exemption from the steel duty, with 59 percent of the total going to firms with
a foreign corporate parent. Most of the waivers last for a year. More than
4,400 applications were denied.
Sen. Elizabeth Warren of Massachusetts, who this month declared herself a
Democratic candidate for president in 2020, told Commerce Secretary Wilbur Ross
in late October that giving exemptions to foreign-owned businesses "appears to
be massive loophole." The purpose of tariffs, she said, is to benefit U.S.
manufacturing, not undermine it.
Warren said in a statement to AP that Trump "claims to be implementing trade
policies that put America first, but here's what the data show: this
administration is handing out special tariff exemptions to foreign-owned
companies at the expense of American companies."
But Scott Paul, the president of the pro-tariff Alliance for American
Manufacturing, said a company's lineage shouldn't be a factor in whether it
receives waivers. Paul said the volume of steel exempted from the duty is small
compared with the U.S. market for steel.
"You'd be hard pressed to find a bigger China trade hawk than me," Paul
said, "but I'm not overly concerned with the number of exemptions granted so
far."
Two subsidiaries of Japanese companies, both in the suburbs of Indianapolis,
had vastly different experiences as each tried to avoid the steel tariff.
Nachi America, in Greenwood, Indiana, received close to 530 waivers for
metal that included a heat-treated steel bar made in Japan with a "precision
straightness" that U.S. suppliers can't match, according to one of the
company's applications. Nachi America declined to comment.
Indiana Automotive Fasteners in Greenfield, about 40 miles away, made a
similar argument: only Japanese-made steel meets the exacting requirements for
the bolts, nuts and screws it produces for the country's largest automakers.
Yet only 43 of its requests were approved while more than 100 were rejected on
the grounds they weren't completed properly. Nearly 150 requests are pending.
The denials perplexed Mark Vance, vice president for sales at Indiana
Automotive Fasteners. Although the company is permitted to refile the rejected
requests, Vance said Commerce Department officials couldn't tell him what
should be modified the second time around, leaving him to conclude the denials
were due to the "subjectivity on the part of the person reviewing" the
applications.
To put the tariffs into effect, Trump employed a rarely used 1962 law that
empowers him to put a levy on a particular product if the Commerce Department
determines it threatens national security. The department posts the requests
online to allow third parties to file objections --- even from competitors who
have an interest in seeing a rival's bid rejected.
The two most prolific protesters are also two of the country's largest steel
producers and key beneficiaries of the tariff. Nucor and U.S. Steel have filed
more than 5,800 objections between them, according to numbers compiled by the
office of Rep. Jackie Walorski, an Indiana Republican opposed to the steel
tariff. Her data also shows requests that trigger objections are rarely
approved.
U.S. Steel announced Monday that due to Trump's "strong trade actions" the
company would be resuming construction of a new steelmaking plant in Alabama
that had been suspended in late 2015 "due to unfavorable market conditions."
Nucor also is expanding and late last month reported record annual earnings for
2018.
Among the thousands of requests hanging in the balance are the dozens
submitted by NLMK USA, the U.S. subsidiary of the Russian steel company
Novolipetsk Steel. NLMK imports huge slabs of steel from Russia and has paid
nearly $150 million in tariffs so far as it awaits rulings, said Robert Miller,
the company's president and CEO.
Miller told the Commerce Department that a domestic shortage of steel slab
means he has no choice but to go overseas for the metal his facilities in
Pennsylvania and Indiana need. But Nucor and U.S. Steel objected, contending
there's plenty of slab available in the U.S. Nucor said NLMK wants to rely on
"cheap steel slab from Russia" to support a business model that is "classic
outsourcing."
(KA)
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