About 30,000 requests for tariff exclusions submitted to DOC as tariffs hit U.S. manufacturers

BendTec Inc., the 100-year-old, 140-worker Duluth company wants an exclusion from President Donald Trump’s 25 per cent tariff on steel. Six other Minnesota companies that make products using steel or aluminium have made similar claims of insufficient U.S. supplies to the federal government. Trump’s tariffs on imported steel and aluminium have left hundreds of U.S. manufacturers with problem securing the required raw material domestically.

Trump claimed the tariffs would boost U.S. manufacturing jobs and rebuild the country’s steel and aluminium industries by making them cost competitive with foreign suppliers.  However, many companies claimed U.S. producers do not make the specialized steel and aluminium that they need as raw material.

According to Christine McDaniel, an economist from the Mercatus Center at George Mason University, who has studied the exclusions, White House and Department of Commerce officials, received 30,000 requests for tariff exclusions from roughly 800 businesses. The number of requests grew 25 per cent from August to September when the impact of tariffs has started showing its signs. The requests are now arriving at a rate of about 1,000 per week.

“The Commerce Department wildly underestimated the requests for exclusions,” McDaniel said. According to her, the tariffs will work as the president expected only when U.S. steel and aluminium producers ramp up production and productivity using new modern technologies

Currently, U.S. companies that use certain specialized steel and aluminium have no choice but to pay 25 per cent more for steel products and 10 per cent more for aluminium products.

According to a spokeswoman, the department had granted approximately 4,700 tariff exclusions as of Sept. 26. U.S. steel and aluminium makers can also protest a company’s tariff exclusions by arguing that they have the production capacity and quality material to meet the need.

The exclusion submission process can also be too complex for small- and medium-sized companies to understand. This might lead to an uneven playing field among domestic companies because; manufacturers that got tariff exclusion would pay much lesser than companies that could not get exclusion, McDaniel said.  

Commerce Secretary Wilbur Ross took a tough stance on tariff exclusions before the metal tariffs took effect June 1.

A regulatory rule stated that “an exclusion will only be granted if an article is not produced in the United States in a sufficient and reasonably available amount, is not produced in the United States in a satisfactory quality, or for a specific national security consideration.”

“If [the steel and aluminium tariffs] were really about national security,” she said, “we shouldn’t be giving any exclusion.”

McDaniel said that the way the exclusion system works leaves many loopholes in the process.