Tariff Waivers: Let the US Government Pick Winners and Losers: NPR

The Trump administration is about to add tariffs – or taxes – on virtually everything the United States purchases from China. But the president has assured that in some cases, waivers will be grantedso that Chinese products can be imported duty-free.

The administration has proposed similar waivers to its tariffs on steel and aluminum, placing the Commerce Department in a delicate position of choosing winners and losers.

Representative Jackie Walorski, R-Ind., Described the process as "master class in the inefficiency of government". His district includes heavy users of steel and aluminum, including recreational vehicle manufacturers.

The administration has received more than 80,000 requests for relief from steel and aluminum tariffs imposed last year. As of last week, more than 55% were still waiting for a decision.

"It's a nightmare, it's like dealing with a lawyer and the IRS at the same time," said Paul Everett, vice president of purchasing at Omega Steel.

St. Louis sells thick-walled steel tubing, primarily to the oil and gas industry. Everett explains that only a few factories in the world produce this type of pipe. Omega has therefore requested the Commerce Department to suspend tariffs for many specialty products.

"We filed about 300 exclusions," Everett said. "And we have, I think, accepted."

Most of the company's requests for tariff relief are still pending or have been dismissed, usually because a US steel company said it could provide the same steel duty-free.

"The good news from the point of view of steel producers is that tariffs are working up to now," said Scott Paul, who represents US steelmakers and steelworkers as president. of the Alliance for American Manufacturing.

He cites data from the American Iron and Steel Institute that steel imports fell 35% after the entry into force of tariffs last year. US mills are now operating at over 80% capacity for the first time in more than a decade.

"There have been about 12,000 jobs created in steel and aluminum since the rates were advertised, and you have seen more product lines come online," said Paul.

Domestic steelmakers are expected to oppose a tariff waiver request only if they can provide the same steel within eight weeks. But the representative Walorski pointed out the steelmakers who objected by indicating delivery dates of up to 21 weeks. And Everett complains that US factories have promised products they could not deliver at all.

"Some of the plants simply can not produce the desired sizes, and have never produced them," Everett said. "Unfortunately, no one really checks the factories to make sure they're able to produce the product."

US steelmakers have managed to block thousands of claims for exemption, more than half of the objections from a handful of major steel producers. The trade economist, Christine McDaniel of the Mercatus Center of George Mason University, said that the United States Steel, Nucor and AK Steel had raised objections to the imports duty-free, representing a much larger quantity of steel than they actually produce.

"They have a very good batting average," she said. "Because when they oppose something, it's either turned down or sent to the stack on hold."

Since the government accepted only a few of Omega Steel's duty-free applications, the company had no choice but to continue to pay the 25% tariff. Some steel importers absorb this extra cost. But Everett said Omega was largely paying the addition to its oil and gas producing clients.

"Nobody wants to pay the extra 25%," he said. "The only people who have this money are in the oil and gas sector, and it's really a transmission for them because you pay for it at the pump."

This consumption is expected to increase with the entry into force of new tariffs on Chinese imports.