(Editor's Note: This article from 5:30 a.m. ET is being
republished to add to additional wires.)
By Inti Pacheco and Josh Zumbrun
U.S. steel producers prevailed in their push this past spring
for the Trump administration to impose tariffs on imported steel
and aluminum. Leading up to the round of duties on $200 billion in
Chinese goods that took effect last month, the steel industry also
succeeded at the opposite job: making some tariffs disappear.
Steel producers in September petitioned the U.S. Trade
Representative for relief on 132 tariff lines. These were primarily
for raw materials and chemicals used in the steelmaking process
that members of the Steel Manufacturers Association import from
China. They were able to get 66, or half, of them removed from the
final list.
Overall, the U.S. took nearly 300 tariff lines off the list,
meaning about one out of every five removals was backed by the
steel industry. A tariff line can refer to a single product but
sometimes includes more than one.
Most other major industry groups had a much lower success rate
in petitioning for exemptions on the grounds that tariffs would
hurt members' ability to do business, according to a Wall Street
Journal review of letters from more than a dozen groups that filed
such requests to the USTR. For example, the National Retail
Federation and National Restaurant Association were granted less
than 5% of their requested exemptions. The National Association of
Home Builders got two of its nearly 500 requested exemptions
removed from the list.
The 27-member Steel Manufacturers Association, whose biggest
member is Nucor Corp., said the tariff lines it pushed to remove
include products that aren't available from domestic sources,
either because there are no U.S. producers or because domestic
producers can't supply enough of them. Many of the petitions for
relief from other industries made similar claims.
In March, Mr. Trump pledged to impose tariffs on imported steel
and aluminum. Steel-industry executives had championed that effort,
saying they needed the tariffs to compete with cheap imports.
The industry continues to support the tariffs and the Trump
administration's trade objectives broadly. But "we wanted to inform
the U.S. Trade Representative about the impact these tariffs would
have on certain products that are critical for domestic
steelmakers," said Philip K. Bell, president of the Steel
Manufacturers Association. As for the industry's relative success
in lobbying for relief, Mr. Bell said, "It's really due to our hard
work."
Still, the greater rate of success seen by the steel industry,
which has close ties to the Trump administration, has sparked
criticism of preferential treatment.
"All decisions on exclusions were made by career staff at USTR,"
a spokesman for the USTR said in a written statement. "By far, the
sector that received the most exclusions by value was consumer
products. We completely reject the notion that favoritism played
any role in this process."
More than 6,000 letters were submitted by different trade
groups, small-business owners and corporations requesting
exemptions from the final list.
The National Retail Federation, whose members include Amazon.com
Inc. and Walmart Inc., asked for the removal of 1,100 tariff lines
and was granted 48 of its requests, including for high chairs and
infant car seats. The Consumer Technology Association, whose
members include giants such as International Business Machines
Corp. and Samsung Electronics Co., wanted to remove nearly 400
tariff lines; 10 were taken off.
The NRF said in a written statement that the final tariff list
unfairly punishes American companies and consumers because it
includes a significant number of products made solely or mostly in
China, and that it can take months or years for companies to find
new suppliers.
The CTA said it was pleased to see the tariff line that includes
parts for smartwatches was removed from the list but said
retaliatory tariffs are a "bad policy."
The National Association of Home Builders said the tariffs
ultimately will result in a tax increase on housing of $2.5
billion.
The number of tariff lines exempted doesn't fully reflect an
industry's lobbying success, partly because some lines can account
for a much bigger dollar value than others. For instance, the steel
industry's 66 exemptions accounted for about $600 million in
Chinese imports last year, out of about $8.3 billion of Chinese
imports removed from the list. The total figure excludes the tariff
line for smartwatches that Apple Inc. and others succeeded in
getting removed from the list.
U.S. Steel Corp., which isn't part of the steel trade group,
petitioned unsuccessfully for more Chinese imports to be added to
the latest tariff list, including tin-mill products. The
Pittsburgh-based steelmaker said the exclusion of these products
would likely cause "disproportionate harm to other U.S. commercial
interests."
The steel industry's ties to the Trump administration include
Commerce Secretary Wilbur Ross, who led the process resulting in
global steel and aluminum tariffs earlier this year and had long
been an investor in steel companies. U.S. Trade Representative
Robert Lighthizer previously spent two decades as a corporate
lawyer often representing the steel industry. A former member of
Mr. Lighthizer's staff, Jean Carroll Kemp, joined the steel trade
association in January as a senior vice president.
The Steel Manufacturers Association said it is "not unique in
having hired former government officials for their expertise and
analysis of trade issues, consistent with post-government
employment ethics rules."
Some trade experts and industry representatives say the system
is geared toward companies with the most resources and access to
government officials. "This type of process is relatively opaque
and inherently prone to favoritism," said Clark Packard,
trade-policy counsel at the free-market think tank R Street
Institute, and a former Republican policy adviser. The process of
petitioning for relief from tariffs requires hiring international
trade lawyers, a group of attorneys that Mr. Packard said is
"relatively small and expensive to retain."
"If you have a close relationship then you can make a case,"
said Kerry Stackpole, executive director of Plumbing Manufacturers
International, which only got four out of 75 tariff lines removed
from the list.
Mr. Bell said there was no advantage for his steel-industry
group. "We just followed the instructions like everyone else and
worked hard to represent our members' interests," he said.
--Anthony DeBarros contributed to this article.
Write to Josh Zumbrun at Josh.Zumbrun@wsj.com
(END) Dow Jones Newswires
October 22, 2018 10:29 ET (14:29 GMT)
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