This past week, the U.S. and EU agreed to not escalate their dispute over trade, but the tariff on steel and a separate duty on aluminum imports remains in place as the U.S. and European leaders aim for a broader trade agreement.
However, the tariffs on steel and aluminum will continue to hit trading partners such as Canada, Mexico, and Japan even if the U.S. and the EU are able to forge a deal, notes the STL News.
To make matters worse, the Commerce Department is drowning in over 20,000-plus waiver applications. American manufacturers, frustrated by the process, are complaining about the seemingly arbitrary decisions on which products will qualify and which will not.
Since the tariffs went into effect in May, steel and steel products have become harder to acquire, leaving many municipal infrastructure projects with months-long delays. This is particularly bad because U.S. policies now require domestically produced parts for public projects.
Accusations against U.S. Steel and Nucor
Robert Miller, president, and CEO of NLMK USA said the objections raised by U.S. Steel and Nucor to his bid for a waiver are “literal untruths.” Miller claims his company has already paid $80 million in duties on the steel slabs it gets from Russia, and if his company doesn’t get an exclusion from the tariffs, it will be forced out of business.
“They ought to be ashamed of themselves,” said Miller, who employs more than 1,100 people at mills in Pennsylvania and Indiana.
U.S. companies are becoming increasingly frustrated over the opposition from U.S. Steel, Nucor, and other domestic steel suppliers who claim they have been unfairly treated because of a glut of foreign imports. A spokesperson from U.S. Steel, Meghan Cox said its objections are based on detailed information about the dimensions and chemistry of the steel included in the requests. “We read what is publicly posted and respond.”
But Miller disputes the claims by Nucor and U.S. Steel that steel slab is readily available in the United States. “That’s just not true,” he said. And Miller’s company isn’t the only one looking overseas for products that are now consistently in short supply and in some cases, are of better quality than those manufactured in the U.S.
California Steel Industries is a mill east of Los Angeles in Fontana, California. The company describes the slab steel shortage as “acute” on the West Coast and has declared that its waiver request is critical to its survival.
Something is wrong with the process
In an attempt to rebuild the steel industry in the U.S. Trump resurrected a little used 1962 law that empowers him to impose tariffs on particular imports if the Commerce Department determines those goods threaten national security. But he also added a little twist that most people were not aware of.
Companies could be excused from the tariff if they could show, for example, that U.S. manufacturers don’t make the metal they need in sufficient quantities. The process for getting an exemption is not only time-consuming, everything on the forms has to be filled in exactly right, and it is expensive, especially for smaller companies.
The requests for exemptions are also published by the Commerce Department and third parties are allowed to comment or object to the requests. And a lot of the objections come from competitors. And interestingly, many of the comments and objections are being submitted just as the comment period closes, making it impossible for the requesting company to defend itself.
As a matter of fact, Representative Jackie Walorski, an Indiana Republican had her office examine the 5,600 comments on exemption requests available for public perusal. The most prolific commenters were Nucor and U.S. Steel with 1,064 and 1,009, respectively.
Willie Chiang, executive vice president of Plains All American Pipeline testified before a Subcommittee on Trade with the House Committee on Ways and Means on Tuesday last week. This very thing of last-minute objections to requests was one of the issues Chiang talked about.
He said his company did not have an opportunity to respond to objections that contained “incorrect information” before the Commerce Department denied its exclusion request.
“The intent here is to restrict imports on a broad scale,” said Richard Chriss, executive director of the American Institute for International Steel, a free trade group opposed to tariffs. “It wouldn’t make sense from the administration’s perspective to design a process that readily granted exclusions.”
