Government picking winners and losers on tariffs--steel gets the exemptions they want

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U.S. steel producers, who prevailed in their push for the Trump administration to impose tariffs on imported steel and aluminum, have also proven equally effective—and far more effective than many other industries—at avoiding tariffs they don’t want.

Steel producers in September petitioned the U.S. Trade Representative for relief on 132 tariff lines, primarily for raw materials and chemicals used in the steelmaking process that members of the Steel Manufacturers Association import from China. They were able to get 66, or half, of them removed from the final list.

Overall, the U.S. took nearly 300 tariff lines off the list, meaning about one out of every five removals was backed by the steel industry. A tariff line can refer to a single product but sometimes includes more than one.

Most other major industry groups had a much lower success rate in petitioning for exemptions on the grounds that tariffs would hurt members’ ability to do business, according to a Wall Street Journal review of letters from more than a dozen groups that filed such requests to the USTR. For example, the National Retail Federation and National Restaurant Association were granted less than 5% of their requested exemptions. The National Association of Home Builders got two of its nearly 500 requested exemptions removed from the list.

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The steel industry’s ties to the Trump administration include Commerce Secretary Wilbur Ross, who led the process resulting in global steel and aluminum tariffs earlier this year and had long been an investor in steel companies. U.S. Trade Representative Robert Lighthizer previously spent two decades as a corporate lawyer often representing the steel industry. A former member of Mr. Lighthizer’s staff, Jean Carroll Kemp, joined the steel trade association in January as a senior vice president.

The Steel Manufacturers Association said it is “not unique in having hired former government officials for their expertise and analysis of trade issues, consistent with post-government employment ethics rules.”

Some trade experts and industry representatives say the system is geared toward companies with the most resources and access to government officials. “This type of process is relatively opaque and inherently prone to favoritism,” said Clark Packard, trade-policy counsel at the free-market think tank R Street Institute, and a former Republican policy adviser. The process of petitioning for relief from tariffs requires hiring international trade lawyers, a group of attorneys that Mr. Packard said is “relatively small and expensive to retain.”

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