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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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