Trump's Tariffs Could Spur Surge in Company Exclusion Requests

(Bloomberg) -- President Donald Trump’s decision to slap duties on imports of steel and aluminum from U.S. allies promises to bring another surge of requests by companies seeking product exclusions in a process already criticized for delays and complexity.

The Commerce Department said it has received more than 17,200 exclusion requests. That number could easily double after the administration announced Thursday it would not continue temporary exemptions on import tariffs for the European Union, Canada and Mexico, said Rufus Yerxa, president of the National Foreign Trade Council.

“Indications are that a lot of people held back because they thought they’d be covered by the exemptions,” said Yerxa, a former deputy director general of the World Trade Organization and deputy U.S. Office of Trade Representative.

Lawmakers are calling on the administration to improve the process by handling requests more expeditiously and making applications less cumbersome for companies seeking relief.

“The product exclusion process just isn’t working,” Representative Kevin Brady of Texas, chairman of the House Ways and Means Committee, said in a statement after the administration’s tariff announcement.

Companies are asking for exclusions from 25 percent tariffs on steel imports and 10 percent on aluminum. They can be approved after requests are posted online for 30 days for any objections if the needed raw material is not produced in the U.S. in a sufficient amount or quality, or for a specific national security reason.

The process normally won’t exceed 90 days, and companies that receive exemptions get refunds, the Commerce Department has said.

Many Companies, Many Requests

As of May 28, more than 15,200 requests for steel exclusions had been received with about 2,000 for aluminum and only about 40 percent of all requests have been posted so far, the department said.

South Carolina-based Greenfield Industries Inc., which makes drill bits and other products, has submitted more than 1,100 exclusion requests because it makes more than 30,000 standard items for stock, said Ty Taylor, the company’s president.

Taylor said he expected two of his competitors will put in as many as 800 exclusion requests alone if the Trump administration ended the temporary country exemptions. The EU, Canada and Mexico together account for about 40 percent of U.S. steel imports, according to Moody’s.

Companies are required to file a separate, detailed request for each product. Taylor said members of his engineering, information technology and materials staff worked for two or three weeks on his requests. But there was little choice, he added.

“These tariffs will consume all of my profit,” Taylor said by phone. “I can suck it up for a little bit, and my parent company is going to help us a little bit, but you can’t do it long term.”

Commerce Secretary Wilbur Ross has said the department “is making an unprecedented effort to process the requests expeditiously.” The number of staff handling them and helping companies to submit their forms was expanded to 19 from six, and Ross has also asked Congress to redirect $3.3 million to help deal with exclusion requests.

But it’s still taking too long to process requests, Yerxa said. Companies and trade groups have made suggestions for improving the process that haven’t been adopted, including allowing businesses to make one request for multiple products.

“With today’s announcement we have a renewed and heightened concern about the process,” said Cindy Sebrell, a spokeswoman for the Motor & Equipment Manufacturers Association, which represents vehicle suppliers and has called for simplifying the application process.

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