President Trump’s trade policy has been a source of growth for at least one industry: The government — specifically, the Commerce Department’s Bureau of Industry and Security and International Trade Administration.
Since the administration has instituted its tariffs on steel, aluminum and Chinese products, those agencies have had to bulk up their staffs in order to handle requests from corporations to have their products excluded from the levies.
Or to put it another way, the Trump administration has had to devote extra manpower to deal with companies that want to avoid paying the tariffs that it has created.
The Commerce Department currently has an estimated 100 staffers and contractors working on processing exclusion requests, according to information provided to the Washington Examiner by the administration. In the last month alone, the Bureau of Industry and Security has hired 18 additional contractors while the International Trade Administration has hired 52.
They have had plenty to do. As of Nov. 12, 48,602 steel and 6,504 aluminum exclusion requests had been filed. Of those, the department has approved 12,356 requests regarding steel, or about one-in-four. It has approved about 830 ones for aluminum, or about one-in-eight.
A Commerce Department staffer described the situation as more or less unprecedented: Its staff just hasn’t had to handle this kind of work prior to Trump taking office, because his trade policies are vastly different than the prior administrations.
The administration nevertheless anticipated that these departments would need to be expanded. In the White House’s proposed fiscal Year 2019 budget for the department, it requested an additional $7.1 million for the BIS so it could conduct “investigations identifying the impacts imports may have on U.S. national security” among another reasons.
“The department has been flooded with requests and is completely short-staffed so they’ve had to bring in contractors — and also volunteers from other federal agencies,” said Richard Mojica, a trade policy lawyer with the D.C.-based firm Miller & Chevalier Chartered, who represents companies before the department.
The administration officially instituted tariffs of 25 percent on steel and 10 percent on aluminum in March, citing Section 232 of the Trade Expansion Act. The tariffs cover all imports, but the administration grants exclusions on a case-by-case basis if it decides that doing so wouldn’t harm “national security,” i.e., because the product isn’t available domestically otherwise.
“The Section 232 exclusion process was put in place to supply domestic consumers with products that could not or would not be made here in the United States or in an exempted country,” the department said in a statement to the Washington Examiner. “Hundreds of US companies have successfully participated.”
The process for getting exclusions from the metals tariffs is completely different from that for requesting exclusions from the administration’s other major tariffs, which cover $250 billion worth of Chinese goods. Those are being handled by the U.S. Trade Representative’s Office, a separate agency, which has yet to grant any exclusions. It has taken in requests for them regarding the first $50 billion in tariffs but has made no decisions so far and hasn’t set up a process for making requests regarding the remaining $200 billion — much to the alarm of the business community.
For the steel and aluminum ones, it is usually not as simple as just asking for an exclusion and waiting until the department issues a decision. Other domestic producers can, and usually do, object to any exclusion requests. The submitter can then object to the objections and both wait for the department to rule on request.
Those involved described the process as a maze. Initially, the department didn’t even have a process for petitioners to respond to objections from third parties. “You put in the application, the domestic industry would oppose and there would be nothing else to do. Commerce would just reject it,” said a Washington-based attorney who handles applications for companies. That has since been fixed to allow the petitioner to object to the objection but it still means the decision can be significantly delayed.
The sheer number of requests that the department receives is somewhat misleading, industry lawyers note, because even minor variations between otherwise identical products, such as a marginal difference in size, can force the industry to file separate requests.
Mojica said a major problem is that many of the department’s own employees, at least in initially, didn’t know enough about the specifics of the steel and aluminum industry to evaluate when a request was reasonable. The department was obligated to create a training program on this, using input from the metal industry.
They have been learning as they go. A Freedom of Information Act request by Minnesota Public Radio’s Marketplace program revealed in November that the department had compiled a 108-page manual to guide the staffers through the process. This was the 16th edition of the manual. The first edition was produced as recently as May and was just 24 pages.
“There’s a big concern in the industry that these people don’t know what they are doing,” Mojica said.
The murkiness of the process has prompted lawmakers to raise question about is fairness. In late October, the Commerce Department launched a probe into how the decisions were being made following complaints by lawmakers like Sen. Elizabeth Warren, D-Mass. The Massachusetts senator pointed to the case of a Russian company named Rusal, whose owner is allegedly a friend of Russian President Vladmir Putin. Rusal received an exemption to the aluminum tariffs that was the department said was made in error and rescinded after Warren’s office inquired about it. Warren said she was concerned about “political interference in the exemption process.”
