Tariffs Set off Scramble for Exemptions03/21 06:21
WASHINGTON (AP) -- When Commerce Secretary Wilbur Ross held up a can of
Campbell's soup in a CNBC interview to make the case that the Trump
administration's steel and aluminum tariffs were "no big deal," the canning
industry begged to disagree --- and they were hardly alone.
President Donald Trump's strong-armed trade policies have set off an intense
scramble among industry groups, companies and foreign countries seeking
exemptions from tariffs of 25 percent on steel imports and 10 percent on
imported aluminum. The push comes ahead of an upcoming round of new penalties
expected to be slapped on China by week's end.
The Can Manufacturers Institute, which represents 22,000 workers at
manufacturers across the nation, estimates the steel and aluminum tariffs would
harm their industry and consumers alike. The institute says there are 119
billion cans made in the U.S., meaning a 1 cent tariff would lead to a $1.1
billion tax on consumers and businesses.
"Secretary Ross has made cans a poster child to dispel concerns about the
costs of tariffs," said Robert Budway, the institute's president. He said his
organization was concerned Ross "is already predisposed to deny our petitions."
Trump's one-two punch on trade has set in motion a deluge of requests to the
Commerce Department for exclusions for certain steel and aluminum products.
Foreign countries, meanwhile, complain the U.S. Trade Representative's office
has not provided specific guidance on gaining exemptions before the steel and
aluminum tariffs are implemented on Friday.
"Typically, the countries are determined before tariffs are announced," said
Josh Zive, senior principal at the law firm Bracewell LLP. This time, countries
don't know whether they will end up being targeted or exempted --- "that's
weird and no one knows what to make of it."
The Trump administration, which has said steel and aluminum imports threaten
U.S. national security, has already given Mexico and Canada a reprieve ---
provided they agree to a revamp of the North American Free Trade Agreement. The
European Union, South Korea, Australia and Brazil are among the countries
seeking the exemptions.
Sen. Ron Wyden of Oregon, the ranking Democrat on the Senate Finance
Committee, said tariffs are "sometimes necessary tools" to protect national
security or fight unfair trade practices. But he said the administration's
approach is producing "chaos, uncertainty, and an alienation of our closest
Emily Davis, a spokeswoman for U.S. Trade Representative Robert Lighthizer,
said the U.S "is engaged in discussions with several countries to determine if
means other than tariffs can be arranged to address our national security
Companies that buy imported steel and aluminum can request tariff relief
from the Commerce Department, especially if they rely on types of imported
steel and aluminum that aren't available from domestic U.S. producers.
Expect a deluge: Steel and aluminum producers have 30 days to object to the
exemption requests. Commerce expects 4,500 requests for relief and 1,500
objections --- and it is supposed to reach decisions in 90 days.
Commerce has said it intends to reach decisions on a company-by-company
basis, not by making across-the-board exemptions for individual steel and
aluminum products. That decision has created anxieties that certain companies
could get tariff relief while others would be forced to pay tariffs on the same
product --- perhaps because in the time between the two requests domestic U.S.
production has ramped up to fill shortages.
"The big thing is, it's arbitrary," said Mary Lovely of the Peterson
Institute for International Economics. "The government is becoming the
matchmaker between the purchaser and the supplier."
"It's a real question to me whether they understand the magnitude of the
requests they are going to get," Zive said of Commerce. "How they're going to
get through them in 90 days is difficult to understand."
Industry officials said other aspects of the exemption process will burden
companies. Manufacturers are unclear whether companies will qualify for refunds
if they end up getting exemptions after they've begun paying the tariffs. And
since Trump set no timeline for ending the tariffs, the companies will need to
reapply for the exemptions on an annual basis.
Companies, meanwhile, have been trying to beat the tariffs by stocking up on
imports. Steel imports rose 15 percent last year and another 17 percent in
The steel and aluminum tariffs may only be the opening salvo.
Administration officials said Trump is expected to announce $60 billion in
tariffs on Chinese imports by Friday on a wide array of consumer goods, from
apparel to electronics, and even on imported parts for products made in the U.S.
Ross, appearing before a House budget panel on Tuesday, faced questions
about the trade moves, with lawmakers warning the tariffs could lead to
retaliation from foreign countries and wreck economic havoc for consumers.
"I worry that now we're engaged in a trade war which is further going to
alienate us from our adversaries," said Rep. Rodney Frelinghuysen, R-N.J.,
chairman of the powerful House Appropriations Committee.
Rep. Derek Kilmer, D-Wash., noted that the decision to exclude aluminum and
steel producers on a company-by-company basis --- rather than by individual
products --- could create the possibility that some companies will gain a huge
advantage over their competitors if they win exemptions.
Ross vowed that "the process will be open and transparent" and Commerce was
working to "minimize the amount of inconvenience that any of the affected
parties will suffer as a result of the process. We're gearing up to be fast, to
be fair and to be practical.