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November 5, 2018

Debate Over Section 232 Tariffs Escalates

According to a report in The Hill newspaper, the inspector general at the U.S. Department of Commerce is planning to audit the process by which companies have been granted exemptions from the Trump administration’s Section 232 steel and aluminum tariffs. The Washington, D.C.-based publication noted, “There have been complaints about the exemption process since the tariffs rolled out, after the Commerce Department was caught in a flood of requests.”

For example, the office of U.S. Sen. Elizabeth Warren (D-Mass.), who is expected to run for president in 2020, announced it reviewed more than 900 steel exemption decisions made by the Commerce Department and found the overwhelming majority of requests went to U.S. subsidiaries of foreign companies. In a letter to Commerce Secretary Wilbur Ross, Sen. Warren said, “You appear to be implementing the tariff exemption program in a way that undermines American steel producers – by allowing large tariff-free imports of foreign steel – and harms American-owned steel-dependent companies instead of improving their competitive advantage over companies headquartered in China and other foreign countries.”

In a letter to the editor published in The Wall Street Journal, Deputy U.S. Trade Representative Jeffrey Gerrish defended the exemption process and noted approximately $19.6 billion in products were removed from the final tariff list issued in September.

As of mid-October, the Commerce Department had received nearly 35,000 requests from 807 firms to be excluded from the steel and aluminum. Of those, 30,916 were for relief from the steel tariffs and 3,933 from the aluminum. According to Politico, approximately 41 percent of the steel requests had been processed (8,542 approved and 4,082 denied) and 14,356 objections to tariff relief had been filed. One-fifth of the aluminum requests had been adjudicated (664 approved and 141 denied) with 395 objections filed.

The United States also continued to contend with opposition from other nations to its tariffs. Early in the week, the United States asked the World Trade Organization (WTO) to halt disputes related to the tariffs that had been brought by the European Union, China, and others. The WTO granted the request, but the stay is only temporary and the cases could be allowed to move forward as early as November.