Tariff Waivers Let U.S. Government Pick Winners And Losers

May 15, 2019
Originally published on May 15, 2019 10:03 pm

The Trump administration is preparing to add tariffs — or taxes — on virtually everything the U.S. buys from China. But the president offered reassurance that in some cases, waivers will be granted, so Chinese goods can be imported tax-free.

The administration has offered similar waivers from its steel and aluminum tariffs, putting the Commerce Department in the awkward position of literally picking winners and losers.

Rep. Jackie Walorski, R-Ind., called the process, "a master class in government inefficiency." Her district includes big steel and aluminum users, including RV manufacturers.

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

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

The St. Louis company sells heavy-walled steel pipe, mostly to the oil and gas industry. Everett says there are only a handful of mills around the world that produce that kind of pipe, so Omega has asked the Commerce Department for tariff waivers for numerous specialty products.

"We filed approximately 300 exclusions," Everett said. "And we've got, I think, 19 accepted."

Most of the company's applications for tariff relief are either still in limbo or were rejected, usually because an American steel company said it could provide the same steel, duty-free.

"The good news from the steel producers' perspective is the tariffs, so far, are working," said Scott Paul, who represents U.S. steelmakers and steelworkers as president of the Alliance for American Manufacturing.

He points to data from the American Iron and Steel Institute showing steel imports fell 35% after the tariffs took effect last year. U.S. mills are now operating at more than 80% capacity for the first time in over a decade.

"There have been about 12,000 jobs added in steel and aluminum since the tariffs were first announced, and you've seen more product lines come on line," Paul said.

Domestic steelmakers are only supposed to object to an application for a tariff waiver if they can supply the same steel within eight weeks. But Rep. Walorski points to steelmakers who've filed objections while quoting delivery dates of up to 21 weeks. And Everett complains that U.S. mills have promised products they can't deliver at all.

"Some of the mills just can't produce the sizes they say that they can, and have not ever produced those sizes," Everett said. "Unfortunately, nobody's really checking the mills to make sure they're capable of producing the product."

American steelmakers have successfully blocked thousands of waiver applications, with more than half the objections coming from just a handful of big steel producers. Trade economist Christine McDaniel of the Mercatus Center at George Mason University says U.S. Steel, Nucor and AK Steel have each raised objections to duty-free imports totaling far more steel than they actually produce.

"They have a very good batting average," she said. "Because when they object to something, it either gets denied or it just goes into the pending pile."

Since the government has granted only a few of Omega Steel's requests for tariff waivers, the company has had no choice but to keep paying the 25% tariff. Some steel importers absorb that extra cost. But Everett said Omega largely passes the bill along to its oil and gas customers.

"Nobody wants to pay the additional 25%," he said. "The only people that have that kind of money are in the oil and gas business. And it's really a pass-through for them because you're paying for it at the pump."

That consumer tab is likely to increase, as new and increased tariffs on Chinese imports take effect.

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AUDIE CORNISH, HOST:

The 2020 Democratic presidential field keeps growing and growing. Twenty-two people are now angling for the Oval Office. Over the next several weeks, we're going to spend time getting to know some of those candidates better with help from the NPR Politics Podcast team. The team is working with New Hampshire Public Radio and Iowa Public Radio to interview candidates out on the campaign trail.

NPR's Scott Detrow kicks off the series with New Jersey Senator Cory Booker, and he's here in the studio to tell us how it went. Hey there, Scott.

SCOTT DETROW, BYLINE: Hey, Audie.

CORNISH: So was it in New Hampshire or Iowa? Where did you meet up with him?

DETROW: We were in New Hampshire. Booker was speaking at a bright blue - like, alarmingly blue gym in Concord, N.H. We heard him give his usual stump speech, and then we had to wait a while before the interview because one thing Booker has been doing after every single rally is taking a picture or recording a video with literally every single voter who wants one. I've seen these things...

CORNISH: Hardcore retail.

DETROW: It lasts hours.

CORNISH: (Laughter).

DETROW: So if somebody says, hey, my mom wanted to come and couldn't be here, he would record a video like this.

(SOUNDBITE OF ARCHIVED RECORDING)

CORY BOOKER: Hey, Maureen (ph). It's Cory Booker. I have the honor to stand here with your progeny, your son, wishing you all the best.

DETROW: And so, you know, this has been part of Booker's image for years - using social media to create these connections. He did it a lot as mayor. It's a little harder to scale that out to a national campaign, but that's what he's trying to do.

CORNISH: All right, speaking of national campaign, we have seen candidates like Joe Biden and Kamala Harris taking on President Trump more directly. Are we seeing the same thing from Booker?

DETROW: No, not at all. As so many candidates talk about they're the best person to fight Trump, Booker is going the opposite direction, talking about unity and love. One thing he'll say is, I ran a fire department as a mayor. You can't fight fire with fire. So he's talking about how he would try to unify the country. But it's pretty hard to do.

And one of the things I asked him is how exactly he plans to do that. I pointed out President Obama talked a lot about hope and unity and bringing the country together, and we saw how divided America was at the end of those eight years that Obama was in office.

BOOKER: I am literally sitting here as the fourth popularly elected African American in the history of the Senate. And the rights and privileges I'm enjoying were fought by people who were told you're moving too fast; you can't get this done; it's impossible to pass civil rights legislation. But we did not give up. What we did do was have activists and leaders that were able to inspire the moral imagination of our country to get us to do things we didn't achieve before.

CORNISH: I want to talk policy now. What did you ask the senator about?

DETROW: We got to a lot of different policy areas - his new gun control plan, climate change, regulating social media. And there was a real similar pattern. He would talk big picture about the urgency for action, about how things needed to be done. But then we'd say, well, what are the specifics? And he never really had a specific answer. He would either go back to that big-picture need for general change or say we could do a wide range of things.

CORNISH: He's been in the public eye for so long. Were there any answers that struck you?

DETROW: Yeah, we were - we're trying to get a sense of who these candidates really are. And one thing I asked him was what was a moment where you really failed in life, and what did you learn from that? And he talked about a really personal story that I've heard him talked about before on the campaign trail, and that's mentoring a young man who lived in the housing project he lived in named Hassan Washington. Washington was a kid who had gotten into trouble a few times, and Booker took him under his wing. He said one reason was because he reminded him of his dad. They got close, but suddenly he was the mayor of Newark and really busy.

BOOKER: In the first days in office, I got called to a scene of a murder. And I was showing up. There was a body covered, dead. And I shamefully tell you I barely acknowledged the humanity kill on the sidewalk. I was just ministering to the living and talking about my plans.

DETROW: Booker says, you know, he moved on with his day, dealing with other things that came up. And it wasn't until the end of the day that he realized that that body was the kid he'd been mentoring, Hassan Washington.

BOOKER: For me, it was the worst gut punch I had taken in my life because my dad was Hassan. And when my dad was growing up, lots of people kept him from falling in the cracks. And God had put this kid right in front of me. And I'll never forget his funeral. We were all packed together there, crying and holding onto each other. And all I kept thinking is here we all are gathered for his death, but where were we for his life?

DETROW: I mentioned this is something he has talked about before. And I've seen him tell this story in jam-packed rooms in South Carolina. And I've seen voters really deeply moved by a story like this. And I think that is something that Booker brings to the campaign trail that a lot of other candidates don't - really seeing firsthand the problems that he's trying to fix.

CORNISH: OK. Big picture, how does Senator Booker fit into the broader slate of 2020 candidates for Democrats right now?

DETROW: He's really in the middle of the pack in polling, media attention, fundraising. He's one of many candidates just in the low single digits, and he really hasn't had that one breakout moment. Booker is focusing really hard on Iowa and New Hampshire. His thinking is these are the two early states that really reward that one-on-one relationship building. So that's why you see him in places like Concord over and over again.

CORNISH: That's NPR's Scott Detrow. You can hear more of this conversation with Cory Booker on the NPR Politics Podcast. Scott, thanks so much.

DETROW: Thank you.

(SOUNDBITE OF ALTIN GUN'S "YOLCU") Transcript provided by NPR, Copyright NPR.

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