Steel tariffs waived for Michigan firms despite Trump's tough trade-talk
Despite President Donald Trump’s tough talk on trade, his administration has granted more than 30 companies in Michigan permission to import tens of thousands of tons of steel made in China, Japan and other countries without paying the hefty tariffs he put in place to protect U.S. manufacturers and jobs.
Trump has positioned himself as an “America First” trade warrior, citing national security concerns and trade imbalances to impose 25-percent tariffs on imported steel.
Behind the scenes, however, his Commerce Department approved tariff exemption requests from 370 companies for up to 4.1 million tons of foreign steel, with roughly 8 percent of the total coming from China and close to 30 percent from Japan, according to an Associated Press analysis of exemption requests filed with the U.S. Commerce Department. Many recipients of the waivers are subsidiaries of foreign-owned manufacturers including Toyota, Hyundai, Mercedes-Benz and Volkswagen.
Fiat Chrysler Automobiles NV's U.S. affiliate was the only one of the Detroit Three automakers to request a steel-tariff exemption, according to the AP analysis.
Fiat Chrysler received exemptions for all seven requests it made for hot-dip galvanized carbon sheet-steel, used for many applications in the automotive industry. The exemption waived duties on 9,198 tons of German steel.
Company spokesman Kevin Frazier declined to comment on the exemptions. Earlier this month, Fiat Chrysler's chief financial officer, Richard Palmer, said on a call with analysts that he expected the company to spend less on raw materials in 2019 than it did last year: $846 million vs. $959 million.
Sixty-six companies in the Great Lakes State had 66 applied for exclusions from steel tariffs, the third-most behind Texas’ 119 and Ohio’s 67. A majority of requests processed in Michigan were approved and are providing some relief to manufacturers, but denials have left some companies confused on the standards.
'Major, major chaos'
Material costs at Dexter Fastener Technologies Inc. in Washtenaw County have risen 3-4 percent since the tariffs went into effect, Dexter Fastener Vice President Jim Cremering said, leading the company to invest time in meeting with customers such as Ford Motor Co., Honda Motor Co. Ltd. and Nissan Motor Co. Ltd. to negotiate reimbursements for the increased costs.
The manufacturer has seen 21 of its steel tariff waivers denied, while 15 were approved, saving the company millions, according to Cremering. Another 25 still are being processed, but all requests are for Japanese steel wire of different grades and dimensions that mainly is used to make automotive engine fasteners.
“It’s caused us major, major chaos,” Cremering said of the tariffs. "We got exemptions for some, but not others. It doesn’t make sense.”
Michigan companies have requested 4,145 steel exemptions, according to the AP data. The U.S. Commerce Department has granted nearly 45 percent, or 1,863 requests, to 37 businesses and denied 16 percent, or 668 requests. The department still is processing 1,614 applications from the state.
The Commerce Department so far has approved nearly 14,000 requests nationwide for exemptions, according to the data. A department spokesman said the requests are granted for the "imports of goods currently unavailable in the United States in sufficient quantity or satisfactory quality, or for other national security considerations."
General Motors Co. did not file for a steel tariff exemption, confirmed Jeannine Ginivan, GM public policy communications manager. A majority of the steel the automaker uses for U.S. production is from North America. The company, however, says rising commodity prices in reaction to trade-policy changes increased costs by $1.3 billion in 2018 compared to 2017.
Ongoing restructuring is helping to offset the increased expense, GM Chief Financial Officer Dhivya Suryadevara told reporters last month, but the company has factored another $1 billion cost increase into its 2019 outlook.
"It’s a volatile environment," Suryadevara said at the time. "We’re going to have to see how that goes month-by-month. The way we can offset that is cost efficiencies, so we’re focused on that."
Ford Motor Co., likewise, sources 95 percent of its steel and 98 percent of its aluminum from the United States for its U.S. vehicle production, a Ford spokesperson said. The Dearborn carmaker forecasts rising domestic metal prices will cost it $1 billion for 2018 and 2019 combined.
Meanwhile, four foreign automakers have applied for steel tariff exemptions: Toyota Tsusho America Inc., a trading affiliate of Toyota Group, has received 50 exemptions with 54 pending. Hyundai Steel America Inc. and Hyundai Steel USA Inc. have 134 applications pending. Mercedes-Benz U.S. International Inc. has six pending. Volkswagen Group of America Chattanooga Operations LLC is waiting to hear back on nine applications.
'A safety issue'
In Michigan, Peerless Steel has requested 634 exemptions, the most of any in the state, though it is well below Texas manufacturer Tubos Reunidos America Inc.'s 4,513 requests. Peerless, a Troy-based steel distributor, received 353 exemptions, was denied six and is waiting on 275 more for processing. The waived tariffs cover various steel rounds totaling 3,006 tons from several countries, including China.
Jackson-based Alro Steel Corp. has received the most denials in Michigan and the United States so far. The government denied 369 applications from the metal and plastics distributor. Another 71 have been approved, and seven are pending.
The requests were all for tool-steel rounds of different grades and sizes from Taiwan. In its applications, the company said only two domestic producers make the product, but they are not the commodity tool-steel rounds Alro requires. David Harrold, Alro vice president of corporate purchasing, declined to comment.
Heating, ventilation and air conditioning supplier Hart & Cooley Inc. has received approval for the most number of exemptions in Michigan so far: 540. The government denied 16, and 14 still are pending, according to the Grand Rapids-based company. A technical filing problem led some applications to be denied, Fraser Engerman, global media relations director for Hart & Cooley's parent company Johnson Controls, said in an email. The company has resubmitted them and expects them to be granted, he said.
The requests cover vents, sheet-metal walls and stovewalls of different sizes from Mexico used in fireplace and chimney systems. The firm said in its applications that the imports are proprietary products made only for its systems — and without the parts, a new system would need to be installed.
“Using segments that are not manufactured to Hart & Cooley’s specifications," Engerman said, "becomes a safety issue."
The Associated Press contributed.