The imposition of steel and aluminum tariffs was supposed to help protect U.S. companies from foreign competition. But it has also created a chaotic, time-consuming exemption process and provoked deep uncertainty among executives, who are delaying investment and hiring.
WASHINGTON — For several weeks this spring, a handful of employees at a Texas steel manufacturer stopped producing pipes used to drill thousands of feet below the Earth’s surface to concentrate full time on another task: trying to win the company an exemption from President Donald Trump’s metals tariffs.
Borusan Mannesmann Pipe U.S. filed 19 separate requests with the Commerce Department asking it to exempt the multiple shapes, sizes and forms of steel pipes that it imports from its parent company in Turkey and then finishes at a plant in Baytown, Texas. Until it gets an answer, the 60-year-old business is paying significantly higher prices for imports of the raw material and is putting off any major projects.
In the two months since the Trump administration’s steel and aluminum tariffs went into effect, the Commerce Department has been deluged with more than 8,200 exemption requests from companies that import foreign metals. With just a handful of countries temporarily exempted from Trump’s steel and aluminum tariffs, companies are scrambling to win exemptions for every screw and spring they import, with each width and length requiring stand-alone filings. One company alone has submitted 1,167 of the filings, according to government officials.
The imposition of tariffs was supposed to help protect U.S. companies from foreign competition. But it has also created a chaotic, time-consuming process and provoked deep uncertainty among executives, who are delaying investment, expansion and hiring as a result.
The disarray stems from the sheer vastness of the administration’s attempt to reshape the rules of global trade in a matter of months, as it threatens a trade war with China and races to rewrite the North American Free Trade Agreement (NAFTA).
Starting Tuesday, the administration will hold three days of public hearings on its plan to impose tariffs on roughly $50 billion in Chinese goods and may also welcome top Chinese leaders to continue trade talks. And it faces a looming deadline to wrap up the NAFTA talks in time for the deal to be approved by the current Republican-controlled Congress.
Those affected by the steel and aluminum tariffs say the administration’s aggressive approach could backfire on U.S. companies and workers.
“It’s hard to predict what could happen to us and these families if the exemption process doesn’t go in our favor,” said Joel Johnson, chief executive of Borusan Mannesmann’s U.S. operations, which employ 264 people. “I don’t have a crystal ball, but for sure we won’t be hiring more people. We might have to reduce our existing base because we won’t have that material coming in.”
The Commerce Department has yet to grant any company an official exemption. A department official said that the agency was making “an unprecedented effort to process the requests expeditiously” and that companies with a valid need for foreign products should rest assured that their needs will be met.
To deal with the flood of requests, the department has added about a dozen workers dedicated to processing the applications, bringing the total number to 19. So far, the department says it has reviewed most of the filings, but only 1,700 had been posted online as of May 8 — and that is just an early step in a lengthy process. Domestic steel and aluminum companies have 30 days to file an objection to any application. Government officials then have 60 days to make a final decision.
“We knew that the process was going to be messy,” said Monica de Bolle, a senior fellow at the Peterson Institute for International Economics. “It just prolongs this pain of not knowing what is going to happen.”
A few countries have been granted blanket exemptions for all their products. The European Union, Mexico and Canada have been given a temporary reprieve from the tariffs until June 1 as the Trump administration tries to reach a deal to limit their steel and aluminum exports to the United States. But countries like Japan, Turkey and Russia have not been exempted, leaving companies that use their metals anxious and uncertain.
Johnson said the potential for permanent tariffs on the raw materials his company imports from Turkey had “put our customers into full panic mode. They need our product to extract oil and gas.”
Without a supply of unfinished steel from its parent company, the U.S. plant, which uses a special heating process to ensure that the finished pipe is strong and resilient, may not make sense to continue operating. U.S. competitors may be reluctant to supply the company with unfinished products that will ultimately end up competing with their finished pipes. Johnson says its U.S. operations may face a $25 million to $30 million hit annually to bring in the materials it needs.
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Its vendors are already worried. Automation Engineering, a South Carolina company that provides equipment to Borusan to move pipes within its factory, sent a letter to the Commerce Department on Tuesday saying that Borusan’s business helped support 75 jobs in its own factory.
Borusan Mannesmann has filed for a two-year exemption for products from its parent company in Turkey, arguing that imports are what allows its U.S. factory to thrive. If it wins an exemption, Johnson said, the firm will invest $50 million to $75 million to build another factory in Baytown, which would employ upward of 170 people.
The tariffs’ most ardent proponents, including some domestic steel and aluminum makers, have argued against granting many exemptions, saying they will create loopholes that ultimately make the measures less effective at defending U.S. industry. The administration, in imposing the tariffs, said national security was at risk from foreign metals that were weakening U.S. manufacturers.
Wilbur Ross, the commerce secretary, has said the department will grant exclusions that “further hone these tariffs” to protect national security while also minimizing the effect on U.S. industries.