Commerce Secretary Ross Ways and Means Hearing

On Thursday, March 22, Commerce Secretary Wilbur Ross testified before the House Ways and Means Committee about the Administration’s trade agenda. Here are some highlights, provided by Janet Kopenhaver, AWPA Director of Government Affairs:

Chairman Brady’s Opening Statement

Chairman Kevin Brady (TX-8) included in his opening remarks five priorities he has for the 232 tariffs and exclusions process:

  1. Keep tariffs targeted to avoid punishing products that are imported fairly
  2. Allow companies to petition for product exclusions that are not available here in the US
  3. Grandfather current contracts
  4. Continue to keep assessing the tariff program and examine if there are different approaches that might work better
  5. Announce a clear termination period, and certainly have the tariffs sunset after a year

He added that he was very much against increasing tariffs on some countries if others become exempt. (Conversely, the Ranking Member on the Committee Richard Neal (MA) asserted that tariffs should increase on other countries if others are exempted.) Brady also expressed concern about the effect of Section 232 duties on downstream consuming industries and potential retaliation by affected trading partners.

Ross’s Opening Statement

Ross stated that the President can alter the tariffs at any time in the name of national security and the Commerce Department will consider exempting an entire industry for national security reasons.

The Exclusions Process

Brady warned Ross that he has to get the exclusions process “right” and failure to do so could cost US in downstream industries. He asked how the process would work. Ross responded that the basis of the exclusions process had been posted on the Commerce Department website and that they have already received 100-200 requests. He added that any business may file an exclusion request, if they use steel products included in the proclamations and use this steel in the United States. Foreign-owned entities may submit a request, as long as they have a facility in the US which employs Americans.

As for the process itself, Ross stated it would take no longer than 90 days. It will encompass a 30-day comment period on the request, followed by 15 days for the interagency process. Then Commerce has up to 45 days to investigate and make a decision. Companies denied an exclusion will be able to appeal.

Exclusion requests would be made on a case-by-case basis, with the exclusion authorization covering the total volume of imports needed by the particular company requesting the exclusion. However, in response to a question from Rep. Peter Roskam (IL-6) who said that companies that purchase steel wire are concerned about the requirement for product-specific requests for varying diameters, Ross responded that Commerce could authorize a blanket product approval, if warranted. Commerce will also consider other technical parameters including idled capacity that will be coming back online due to the tariffs and steel companies’ expected new expanded activities due to the tariffs.

In response to a question, Ross clarified that companies will be able to submit confidential business information in these requests, just like they do for AD and CVD case submissions.

Brady asked whether the tariff exclusions would be retroactive. Ross responded that yes, Commerce is discussing an escrow process with US Customs and Border Protection for the deposit of Section 232 duties.

Downstream Industries

Rep. Erik Paulsen (MN-3) stated the need to limit the tariffs so that downstream industries are not hurt. These companies are already seeing prices hikes. He asked whether the Administration analyzed the downstream impact. Ross insisted they had done analysis and concluded that, in the aggregate, there will not be material damage. He added that these steel tariffs and downstream industries only represent a small segment of our economy.

In response to a question by Rep. George Holding (NC-13), Ross promised that if we start seeing a vast influx of steel finished products being imported (circumvented or dumped) into the US, Commerce is ready to take legal actions. He added that he is very “mindful that the worst way to help steel manufacturers is to destroy their customer base.”

Overall Goal of Tariffs

Ross concurred that the overall goal is to create a global response to combat steel overcapacity in China and other countries. He believes that the extensive bilateral and multilateral negotiations on these tariffs will help address the overcapacity problem. He cited that there are 212 outstanding cases (50% of total number of cases) that are related to steel, and as a result imports from China have greatly decreased. However, it is like a game of “whack-a-mole” because now the imports are coming from many other countries (circumventing). He added that the amount of steel that China produces in one month is about how much the US produces in one year.