Commerce Officials Signal Few Product Exclusions to Steel, Aluminum Tariffs Will Be Granted to U.S. Industry

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03/14/2018 | 05:46 pm

By William Mauldin

WASHINGTON -- U.S. businesses seeking to avoid tariffs on imported supplies that incorporate steel and aluminum will face high hurdles under rules being developed by the Commerce Department, which is signaling it will grant exclusions only sparingly and based on national-security concerns.

Commerce officials are preparing to release, either at the end of this week or early next week, a detailed blueprint for industry groups seeking exclusions, according to people familiar with the plans.

President Donald Trump last week announced the tariffs on global steel and aluminum imports, of 25% and 10% respectively, to protect domestic metal producers. The move generated retaliation threats around the world and started a competition for countries and industries seeking exceptions to the trade barriers.

U.S. importers would likely have to pay tariffs on metals imported this month after the barriers are implemented, even if they are applying for an eventual exclusion, according to people familiar with the discussions. It isn't clear if the tariffs would be refunded if company is subsequently granted an exclusion, the people said.

Commerce officials briefed congressional aides Tuesday. Commerce Secretary Wilbur Ross, along with officials from other agencies, will take into consideration arguments focused on national security, the legal basis for the tariffs under Section 232 of a 1962 trade law, according to people familiar with the process.

Mr. Ross is set to answer questions about the tariffs at a public House committee hearing March 22, a day before the tariffs are expected to take effect, a congressional aide said. The Commerce rules will allow for a 90-day application process for exclusions that includes public comment.

U.S. Trade Representative Robert Lighthizer's team has been negotiating with foreign governments about national-level tariff exemptions, also based largely on national security.

Companies ranging from auto-parts producers worried about rising steel costs to brewers concerned about aluminum for cans are expected to seek exclusions.

Commerce Department officials are sending the message they don't want to exclude many products, preferring instead that the U.S. metal industry add production to supply any needed products, the people said.

A high-quality steel used in tires could in theory be excluded from the tariffs if administration officials determine it can't be produced in sufficient quantities in the U.S. and if the material is obtainable in the Japanese market or that of another U.S. ally.

Backers of the tariffs are pushing for product exclusions to be temporary or subject to renewal, hoping U.S. industry will soon be able to supply more items that are now imported.

Manufacturers and commodities traders are watching closely because the rules are likely to affect the prices of raw materials used in manufacturing a wide range of products -- from auto parts to steel girders to construction machinery.

Following the passage of tax legislation, the Trump administration has shifted toward implementing the America First trade policy the president promised during the 2016 campaign.

The tariff push has generated complaints from many GOP lawmakers worried about economic damage or retaliation from abroad, but congressional Republicans say they don't have the votes to block the tariffs and override a likely veto.

The Trump administration sees the steel and aluminum tariffs as a way of addressing -- somewhat indirectly -- China's high levels of metal production and exports, blamed for lowering prices and threatening the industry around the world.

In recent years the Commerce Department has set some individual tariffs blocking many types of allegedly dumped and subsidized steel and aluminum from the U.S., but the Trump administration is hoping the global tariffs -- likely to hit some top allies -- will lead to more international pressure on Beijing.

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