Washington Insider -- Monday

The Fight for Steel Tariff Waivers

Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.

House Vote on Second Immigration Plan Possible

The House Thursday rejected a plan by Rep. Bob Goodlatte, R-Va., on immigration and that prompted a delay on a vote on a second package. That delay has now moved the vote to this week after a closed-door meeting of House Republicans.

Some conservatives complained that the compromise omitted a requirement that employers use the E-Verify system to check workers’ immigration status, while others lawmakers wanted reassurances on how the legislation addressed young immigrants brought to the country illegally as children, often called Dreamers. A provision in the compromise bill would also end the practice of separating adults and children crossing the border by detaining them together, allocating money for family detention facilities.

The compromise bill would appropriate $23.4 billion for border security, including a wall and physical barriers along the southern border, and provide six years of renewable legal status to Dreamers. It would also end the diversity-visa lottery program and cut the family-based visa program.

President Trump on Friday urged Republican lawmakers to "stop wasting their time on immigration" until after November's midterm elections, which he predicted will bring enough GOP members to Washington in a "Red Wave" to allow the party to pass legislation on its own. Some lawmakers have said Trump is jeopardizing efforts to pass legislation. House Majority Whip Steve Scalise, R-La., said, "Unfortunately, I think what the president was expressing is the frustration that Democrats have refused to engage in solving the problem."


Trump Administration Unveils Government Reorganization Plan

The White House released a 132-page plan that would make major changes in U.S. government agencies, including moving the Supplemental Nutrition Assistance Program (SNAP) out of USDA and into a reconfigured Department of Health and Human Services (HHS), which would be named the Department of Health and Public Welfare.

It would also seek to move the food safety functions from USDA and FDA to one agency – the Federal Food Safety Agency. Plus, it would move some USDA housing programs to Housing and Urban Development (HUD) and move some functions of the Army Corps of Engineers to a civil works agency.

However, most of the changes suggested in the report require congressional approval and indications are there is little appetite in Congress to make the kinds of changes the administration is proposing, giving the full plan extremely low odds of happening.


Washington Insider: The Fight for Steel Tariff Waivers

There is a new government policy scene these days, as the Trump administration decides who should and should not receive waivers from the new import tariffs, the New York Times said this weekend.

The Times said there is a broad scramble underway to figure out what criteria will be applied and how the decisions will be made.

While the administration granted seven companies the first set of exclusions from its metal tariffs this week it rejected requests from 11 other companies — but the main work remains to be done, as the Commerce Department is in the process of responding to the 20,000 applications that companies have filed for individual products.

The Department announced last week that it had granted exclusions from the 25% steel tariffs to seven companies that requested them for 42 products. The companies included the razor maker Schick Manufacturing and Nachi America, which makes cutting tools, bearings and hydraulics.

But the department denied 56 products, from companies that included Seneca Foods, a fruit and vegetable producer; Bekaert, a maker of steel wire; and Mills Products, a metal fabricator. Some businesses, such as Primrose Alloys, a metals trading company, and Wright & McGill, a maker of fishing gear, were denied several applications.

Some applications, like those of Seneca and Mills Products, were rejected because they were deemed incomplete, according to decision memos posted online. But several companies whose applications were denied faced objections from American steel makers.

Nucor, an American steel company that has supported the tariffs, argued against Bekaert’s request for an exclusion for wire rod that it uses to produce cord that goes in tires. Nucor said Bekaert had access to enough of the rod without requiring an exclusion.

While companies say they still have uncertainties about the requirements for exemptions, many of the approvals and denials so far appear to have come down to whether an American steel or aluminum manufacturer objects to the request. If a United States company opposes a request, the Commerce Department is more likely to reject the application, according to Wilbur Ross, the Commerce Secretary.

In fact, Ross says he expected the majority of requests being received will be denied, since many of them are not based “on the idea that the products are not really available.”

“Many of the requests are effectively requesting relief simply because the product prices are higher than they would be with the imports, and that’s not a sufficient reason to grant the exclusions,” he said.

United States Steel, which said it was restarting idled furnaces around the country in response to the tariffs, has filed objections against a slew of companies seeking exclusions, sometimes opposing dozens of requests from the same source. In most filings, U.S. Steel said it was capable of producing the metal for tubing, casing, piping and sheeting that companies asked for permission to import.

The Commerce Department must still deal with nearly 20,000 petitions in its queue. While the administration has said the exclusions are an effective way to ensure the fairness of the tariffs, companies that have applied for the exclusions criticized the exercise as both long and disorganized.

“This is the most screwed-up process,” said Mark Mullen, president of Griggs Steel, a steel distributor in the Detroit area. “This is a disservice to our industry and the biggest insult to our intelligence that I have ever seen from the government.”

Mullen has made 90 requests and has not been told the status of any of them. He is waiting to submit 2,000 more requests, “but they take so damn long,” he said.

As the chaotic exclusion process continues, President Trump is expanding his trade efforts on multiple new fronts, threatening tariffs on up to $450 billion of products from China and roughly $350 billion of imported autos and auto parts.

As you might expect, the handful of companies that have received exclusions to the tariffs are so far pleased. Even so, one producer said he filed a request for the exclusion months ago, along with roughly 60 others for various products that he has not yet heard about. The Commerce Department did not inform him that his request had been granted. Instead, he found out by checking for updates online every day.

“This has been a very frustrating saga for us,” said Todd Adams, the vice president of Stainless Imports in Florida, after a reporter informed him Friday that his application had been denied, with no reason provided.

Last summer, the company landed an order worth several million dollars for a Midwest dairy project. Adams was asked whether his company could provide stainless steel tubes with unusual dimensions. He eventually found a Chinese supplier and was at a port inspecting the first two containers when he heard about the Trump administration’s tariff plan.

“This is a personal hit,” he said, likening the payment of hundreds of thousands of dollars in tariffs to a ransom for his own products.

It is hard to see how this process overall meets the federal rules typically required for allocation of important benefits such as these waivers – suggesting that much more formal criteria and competitive allocations will be required in the near future. In the meantime, the current process suggests that the government is very much in the process of selecting winners and losers in a significant part of the U.S. economy — an effort that is likely to face a fairly tough political reckoning in the near future, Washington Insider believes.

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