The US Commerce Department recently granted a tariff exemption to oil major Chevron for its imports of 4.5-inch Japanese steel tubes for oil exploration. But the department rejected a similar request from Borusan Mannesmann Pipe to exclude 4.5-inch steel pipes imported from Turkey for casing used to line new oil wells. The reason: multiple US steelmakers objected to Borusan’s application, arguing they could supply the product, according to the department. Chevron drew no such objections.
When US President Donald Trump slapped a 25 per cent tariff on imported steel this spring, his administration allowed companies to apply for exemptions if needed metals were not available in sufficient quality, quantity or in a reasonable time.
But the process for seeking relief is proving slow and controversial as a deluge of applications has buried the small staff initially assigned to the task, prompting the department to hire dozens of extra contract workers. The limited number of decisions made so far are drawing protests from rejected applicants and sparking disputes between US steel mills and importers of products from their foreign competitors.
Commerce has received more than 37,000 exemption requests, far more than it planned to handle. Although 130 employees and contractors are now evaluating the applications, the agency had only ruled on 2,871 of those requests as of August 20.
The department has so far approved 1,780 of the applications and denied 1,091. Separately, the department turned back more than 6,000 requests for what it called “filing errors” by applicants, who can fix and resubmit their requests.
Rejected applicants have criticised the department for taking sometimes misleading objections by domestic suppliers at face value and for not allowing importers a chance to rebut their arguments.
“The Commerce Department is now hard-pressed to spend more than a few minutes reviewing each application,” said Bernd Janzen, a partner in Akin Gump Strauss Hauer & Feld LLP, which is working with companies pursuing tariff exclusions.
Commerce acknowledged its staffing issues and said it has requested permission from Congress to reallocate $5 million of its own funds to accelerate the review process. Congress has so far only approved a reallocation of $2 million, the agency said.
“We will continue to run behind unless we are allowed to divert more Commerce resources to the process,” the department said in a statement to Reuters.
The agency is also revising its evaluation process.
“The Department fully acknowledges that the information provided in an objection may not be correct,” the agency said.
Twenty exemptions have been approved over the objections from US steelmakers, a sign that its process is “balanced, fair and transparent,” the department said.
SUPPLIER OBJECTIONS
Companies seeking exemptions have complained that Commerce provides little detail on the rationale for denying applications beyond boilerplate language that the product a company wants to import is available from a US supplier.
Joel Johnson, chief executive of Borusan Mannesmann Pipe, a US subsidiary of a Turkish steelmaker, said the department did not explain how it came to reject its application.
“We don’t know for sure why they denied us, but we did have objections from our competitors who also make pipe,” said Johnson, adding that letters of support from its suppliers did not appear to influence the decision. Borusan expects to see its operating cost climb by $25 million to $35 million annually as a result of the tariffs. — Reuters
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