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US Issues First Steel Tariff Exemptions

Monday, June 25, 2018

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The U.S. Department of Commerce announced its first round of exemptions to new steel and aluminum tariffs Wednesday (June 20), at the same time noting that it is investigating whether some companies in the market are taking advantage of the duties and raising prices unduly.

rolled steel
© iStock.com / Leonid Eremeychuk

Commerce Secretary Wilbur Ross said Wednesday that prices for steel in the U.S. have in some cases jumped by degrees greater than the amount of the tariffs, leading to suspicion that market players are speculating based on high demand as a result of the duties.

Commerce said it has so far issued 42 exemptions, to seven companies importing steel products from Japan, Sweden, Belgium, Germany and China. The companies are:

  • Schick Manufacturing Inc., of Shelton, Connecticut;
  • Nachi America Inc., of Greenwood, Indiana;
  • Hankev International, of Buena Park, California;
  • Zapp Precision Wire, of Summerville, South Carolina;
  • U.S. Leakless Inc., of Athens, Alabama;
  • Woodings Industrial Corporation, of Mars, Pennsylvania; and
  • PolyVIsion Corporation, of Atlanta.

The companies make products including steel machinery and tools, classroom whiteboards, auto parts and shaving razors, and all argued that the steel they need for their manufacturing is not manufactured domestically at the quantity they need, or in some cases at all. Woodings manufactures tools and parts used in the steel and metals production industry, as well as in mining.

None of the exemptions granted thus far appear to relate to structural steel or to steel for pipelines; a number of pipeline builders have applied for exemptions for their projects.

Exemption Criteria

In order to qualify for an exemption, a U.S. company must prove to the Commerce department that the particular steel product it needs for its business is not made in the United States or is not made in sufficient quantity (or to sufficient quality standards) in the United States. The department can also grant exemptions “based on specific national security considerations."

Steel pipes
© iStock.com / zhaojiankang

The companies granted exemptions thus far make products including steel machinery and tools, classroom whiteboards, auto parts and shaving razors.

The department also announced Wednesday that it would be denying 56 requests made by 11 companies.

To date, the government has received more than 20,000 requests for exemptions to the tariffs; Commerce will review requests on a rolling basis and issue exemptions as the reviews continue. The department did not specify whether or how many exemptions to the new aluminum tariffs have been granted to date.

Inflated Prices

According to Reuters, Commerce Secretary Wilbur Ross said Wednesday that prices for steel in the U.S. have in some cases jumped by degrees greater than the amount of the tariffs, leading to suspicion that market players are speculating based on high demand as a result of the duties. Ross referred to the price hikes as "antisocial behavior by participants in the industry." 

Reuters reports that U.S. hot-rolled steel coil is up 53 percent over prices a year ago.

Tariff History

President Donald J. Trump first announced the tariffs in March, setting duties of 25 percent on steel imports and 10 percent on aluminum imports. Weeks later, the Department of Commerce confirmed that some countries would have opportunities for exemption as trade negotiations continued.

On June 1, the U.S. allowed the tariffs to go into effect for Canada, Mexico and the European Union, after months of discussion of possible exemptions.

   

Tagged categories: Aluminum; Economy; Government; Market; Steel

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