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The manufacturing community holds conflicted views on tariffs

U.S. International Trade Commission to begin a formal review of Section 232, 301 tariffs

U.S. manufacturers have differing opinions on tariffs.

The U.S. International Trade Commission has announced plans to investigate both Section 232 and Section 301 tariffs with the intent of delivering findings by the end of March. Darwel/iStock/Getty Images Plus

The U.S. International Trade Commission (ITC) has started an investigation of the Section 232 steel and aluminum tariffs and the Section 301 tariffs on various Chinese imports. The ITC, an independent federal agency, plans to issue a report by March 12.

The ITC’s hearings in Washington, D.C., in mid-July brought out a cross section of U.S. manufacturers with competing viewpoints on both tariff programs. The “mixed bag” nature of those attitudes has frozen, for the most part, the Biden administration’s ability to make significant changes in the tariffs, which were established by the previous administration. For example, auto parts manufacturers hate the Chinese tariffs while many heavy equipment sectors love them.

“The ITC reports are taken seriously by the administration. It won’t be a deciding factor, but it is relevant,” said one Washington lawyer who attended the hearings on behalf of a steel-importing manufacturing client.

Illustrating the divide among manufacturers was the Motor and Equipment Manufacturers Association (MEMA), which acknowledged the positive move by the Biden administration in replacing steel tariffs for the E.U., Japan, and the U.K. earlier in 2022 with tariff rate quota programs. But while MEMA wants to see a full phase-out of the steel and aluminum tariffs, MEMA’s Bill Frymoyer, vice president, public policy, suggested the Section 301 tariffs are a much bigger problem for his members.

“The four-year odyssey with 10% to 25% tariffs in place on imports from China has been problematic for most MEMA members, contributing to supply chain woes and price increases,” Frymoyer said.

There is no “exclusion process” in place for manufacturers who want to avoid Chinese tariffs in the event there is no U.S. supplier for what they need. On the other hand, importers of steel and aluminum have such a process.

“The absence of a broad exclusion process has harmed the ability of suppliers to import critical manufactured components, material inputs, and machinery that are unavailable in the United States,” Frymoyer said.

However, again illustrating conflicting views among various manufacturing sectors, Jeff Henderson, president of the Aluminum Extruders Council, complained about the steel exclusion process where the Commerce Department has established “General Approved Exclusions.” These exclusions allow companies that make products from extrusions to import finished aluminum extrusions without paying aluminum tariffs. That hurts U.S. manufacturers of finished extrusions, which they sell at higher prices because they have to pay 10% tariffs on aluminum they use, according to Henderson.

While MEMA wants the China tariffs eliminated, others like JLG Industries, which makes area work platforms out of steel, want them maintained. Jeff Ford, JLG’s director global strategy and business development, lauded the Section 301 tariffs on imports of Chinese mobile access equipment.

JLG and other companies in its industry have lodged complaints at the ITC, pointing to the dumping of Chinese imports in the U.S. The mobile access equipment industry has won a number of material injury victories at the ITC, triggering the Commerce Department to assign tariffs to those Chinese products, which is added to the Section 301 tariffs put in place during the Trump administration.

The ITC also has made affirmative injury determinations for various categories of steel imports. For example, on July 20, the ITC decided that tariffs had to remain on imports of cold-rolled steel flat products from China, India, Japan, South Korea, and the U.K., but that tariffs on similar Brazilian imports could be revoked.

A big question that the ITC report undoubtedly will address is whether the steel and aluminum tariffs are still needed. They were imposed because of financial harm to U.S. steel manufacturers and the concomitant damage to the U.S. defense base. The Chinese tariffs had a different rationale. But Charlie Souhrada, vice president, regulatory and technical affairs, North American Association of Food Equipment Manufacturers, said domestic steel producers are now doing fine.

“For example, the top five U.S. steel firms more than doubled steel prices and their collective profits soared from $11 billion in 2018 to $31.9 billion in 2021,” Souhrada said.

About the Author

Stephen Barlas

Contributing Writer

Stephen Barlas is a freelance writer that has more than 30 years of experience covering Congress, the White House, and the many regulatory agencies found in Washington, D.C. He has covered issues affecting the metal fabricating industry for The FABRICATOR for more than a decade.