Metal manufacturers and users are calling the Section 232 product exclusion process “onerous” and “chaotic.” The Coalition of American Metal Manufacturers and Users expressed their concern about the tariff exclusion process in a letter to Secretary of Commerce Wilbur Ross on May 18. More than 8,200 exclusion requests have been filed with Commerce with no approvals granted and only a fraction of those requests posted online.
The coalition represents over 30,000 companies and more than one million workers in the manufacturing sector and downstream supply chain in a wide variety of industries. CAMMU offered Ross reasons why the tariffs should be eliminated and, in lieu of that, how the exclusion process should be revised to streamline the process and improve transparency.
The steel and aluminum tariffs benefit only a small section of the nation’s economy while potentially resulting in a loss of five jobs for every one gained, said CAMMU. The tariffs result in steep price increases for downstream products that must be absorbed by businesses or passed on to American consumers.
“Outcomes this extreme are unacceptable and are a grave concern for metal manufacturers and users across the country, including the 6.5 million Americans employed in steel using jobs,” wrote CAMMU. “Even if major exporting steel and aluminum countries receive exemptions and certain products are excluded, failure to adhere to a transparent and expedited process creates uncertainty surrounding the tariffs’ direction and scope that is inherently damaging.”
CAMMU quoted the National Retail Federation which stated in a multi-industry letter to U.S. Trade Representative Robert Lighthizer, “The very discussion of tariffs on billions of dollars of goods and threats of a potential trade war create uncertainty across the U.S. business and farm community, depress commodity prices, and have already harmed U.S. companies, farmers, consumers and markets.”
In just the first six weeks, exclusion requests nearly doubled the 4,400 comments the Commerce Department expected for the entire exclusion period. The sheer magnitude of requests has become chaotic and burdensome to the department, adding to the uncertainty created by imposition of the tariffs, said CAMMU.
Requirements within the exclusion process Interim Final Rule are particularly onerous for businesses, said CAMMU. Exclusions must be made on a product basis and are limited to the entity making the request. Companies that use the same product must individually submit a request, creating massive duplication that further delays the review process. In addition, each diameter change to a product requires a separate filing—one company was forced to submit 1,167 discrete filings.
Trade associations may not file for exclusions on behalf of their members, adding to the burden of smaller businesses with limited resources.
Commerce has not established the criteria necessary for approval of an exclusion request and has not approved any applications to date. Manufacturers want to know: If no objections are filed, will exclusion automatically be granted? What consideration will be given to objections, including those from steel and aluminum producers who file objections yet readily admit to not currently producing the subject material in the quantity or quality needed?
The coalition suggests the following changes to Commerce’s Interim Final Rule related to the request for exclusions in order to provide expedience and transparency:
- Allow companies to file a single unified exclusion requests for products with small variations in length and width.
- Make approved exemptions generally applicable for a particular product and product use. Although Commerce can approve a “broader” application, no details are provided for companies on how to request such an application.
- Allow trade associations to submit requests on behalf of members.
- Apply reasonable standards to the review of exclusion requests and objections to those requests. Specifically, CAMMU says steel and aluminum producers should not be allowed to provide “unevidenced assertions” that they have the ability to make a product even though they don’t currently do so.
- A firm timeline should be adhered to in providing responses to exclusion requests so companies can adjust supply contracts accordingly.
“The tariffs announced by the administration on March 8 have come at a great cost for U.S. steel- and aluminum-using manufacturers,” wrote CAMMU. “Moving forward, it is essential that the process of applying for exclusions from these tariffs be conducted in an improved and expeditious manner to minimize the burden for affected businesses.”
Sandy WilliamsRead more from Sandy Williams
Latest in Trade Cases
Leibowitz: WTO Reform—Can It Happen?
Last week the World Trade Organization (WTO) held its periodic retreat for members to discuss the future of the organization.
CRU: Brazilian Steelmakers Scale Back Amid Calls for Import Duties; Mexico Imposes Them
ArcelorMittal said it expects to produce less steel than previously forecast in Brazil. Gerdau has hinted at potential layoffs as imports surge. The Brazil Steel Institute is asking the government to raise import levies to 25% from the existing 9.6%. Meanwhile, Mexico has applied levies to some steel imports.
Biden to Meet EU Officials in Washington to Discuss Steel
US President Joe Biden is set to meet European Commission President Ursula von der Leyen and European Council President Charles Michel on Oct. 20 in Washington ahead of a deadline for an agreement on steel, according to a report in Reuters.
China Has Failed to Comply With WTO Commitments: AISI
The American Iron and Steel Institute (AISI) has laid out a case for China’s failure to comply with its World Trade Organization (WTO) obligations, which it joined in 2001.
Deputy USTR Hits Out at ‘Surge’ of Mexican Steel Imports
Deputy United States Trade Representative (USTR) Jayme White met on Wednesday with Mexico’s Under Secretary of Economy for Foreign Trade Alejandro Encinas, and discussed issues regarding the “surge” into the US of Mexican steel and aluminum imports.