Free Trade

Trump's 'National Security' Steel Tariffs Are Just Old Fashioned Protectionism. Here's the Data To Prove It.

The department has granted just 1 percent of the tariff exemption requests that were challenged by domestic steel producers.

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American manufacturers have filed more than 100,000 requests for relief from the Trump administration's steel tariffs. Take a close look at which requests have been denied, and you'll glimpse the depth of the cronyism contained in this scheme.

Since June of last year, the Commerce Department has granted just 1 percent of the exemption requests that were challenged by domestic steel producers, according to government data aggregated by researchers at the Mercatus Center. By comparison, the department has granted 70 percent of the exemptions that were not challenged by domestic steelmakers.

When Trump imposed a 25 percent tariff on imported steel in March 2018, he also instructed the Commerce Department to allow American businesses to seek exemptions from those tariffs, which can be granted if domestic metal supplies are shown to be insufficient for a company's needs.

This "tariff exclusion process" is stacked against American steel-consuming businesses in several important ways. After exemption requests are filed with the department, steel producers are allowed to challenge those requests. Such an objection can not be challenged by the business that first filed the request. The criteria for determining whether a request is granted or denied is murky at best. Business owners have complained that simply getting a decision one way or the other can take months. And there is no way to appeal the department's ruling.

Members of Congress have warned that the process lacks "basic due process and procedural fairness" and that it could be "abused for anticompetitive purposes." After two years, the government's own data suggests that's exactly what has happened.

The steel tariffs were implemented under Section 232 of the Trade Expansion Act of 1962, which allows presidents to impose tariffs for national security reasons—not for purposes of economic protectionism. But protectionism appears to be a major factor in determining whether tariff exemptions are granted. American steelmakers appear to have significant influence over what is supposed to be an unbiased process.

Of course, the process was never really meant to be unbiased. Administration officials had a series of meetings with "interested parties" in the weeks before the tariff exclusion process was established, according to an October 2019 report filed by the Commerce Department's inspector general. The report found no written summaries of more than 100 meetings and telephone calls that took place during March 2018.

"This gives the appearance that Department officials may not be impartial or transparent and are potentially making decisions based on evidence not contained in the official record for specific exclusion requests," the report concluded. The inspector general called on department officials to improve the transparency of the tariff exclusion process and to implement a formal appeals process.

There is also a tremendous backlog—more than 40,000 exemption requests are currently "pending," according to the Mercatus analysis of federal data. And the exemptions last for just one year, so even companies that do successfully navigate the cumbersome process are never really free from it.

American businesses that rely on imported steel may be breathing a small sigh of relief after President Donald Trump granted a pandemic-inspired three-month delay for some tariff payments. Still, the Mercatus Center's analysis of the latest federal data—which includes exemption requests filed, denied, and approved through March 14—suggests that cronyism remains alive and well within the tariff bureaucracy.

The steel tariffs have done little to boost domestic steel production, and it may have contributed to job losses in the industry. But they did give birth to a protectionist racket.

NEXT: Trump's Immigration Pause Won't Outlast Him

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  1. Also of particular interest to us Koch / Reason libertarians: Drumpf’s tariffs have contributed to our benefactor Charles Koch’s heartbreaking financial struggles over the past few years. Nobody who has worked as hard and achieved as much as Mr. Koch should have to watch his fortune collapse to under $50,000,000,000 in his twilight years.

    #HowLongMustCharlesKochSuffer?

    1. “Hark! I can fathom this no more,” whisper-shouted Charles Koch. “Another billion gone, just like the firmness of my man-bosom.”
      “Shhhh, it’s ok, it will be all right,” cooed OBL, feeding another spoonful of pureed fillet mignon into Charles’ trembling mouth. “The market will bounce back, once people can take these evil shutdowns no more.” OBL leaned in and wiped some spittle from Charles’ mouth.
      “My fortune is dribbling away like the urine into my underwear,” gently sobbed the tycoon.
      A noticeable excitement creeped into OBL’s voice, as he remarked “Well, I guess it’s time for another changin’!” He lifted Charles’ frail body from the chair onto the cocobolo changing table. “OBL is gonna make it all right.”

      1. If you’re going to put me in your bad fiction, you need to do better.

        First, I’ve stated many times my pronouns are they / them, not he / him.

        Second, I do not claim the lockdown is wrong. I have only criticized restricting the movement of people who want to travel INTO this country — not WITHIN it.

        #LockDownTheInterior
        #OpenTheBorders

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  2. Look, how many times do us commenters have to explain it to the writers at Reason that tariffs are not taxes? There is no R in “tax.”

    1. Exactly. Tariffs on Chinese goods are tariffs against China to punish them for not being fair. It’s just not fair that they have a comparative advantage in some things, so tariffs make it fair. Tariffs aren’t taxes. They are fairness.

      1. Maybe you two should fuck each other and leave the rest of us alone.

    2. I now spell it Tarx.

      1. No, it’s Trax, but in China it is Tlax.

  3. You won’t prove squat to the Trumpistas. H beat Hillary, he’s a saint who tells no lies and knows everything, so there is no need for anybody to fact check Trump, or even consult the most basic Econ 101 principles.

  4. there is no need for anybody to fact check Trump

    Fact checking Trump is fake news.

    or even consult the most basic Econ 101 principles.

    Haven’t you been paying attention. Upper level Econ classes don’t build upon the basic principles. Nope. Basic principles are for simple minds. Truly enlightened people understand that politics void those basic principles, and if you don’t understand this you’re an anarchist who voted for Hillary.

    1. See modern monetary theory.

    2. There really is no point to you. You’re dishonest and moronic. You make no real points, nor is there any point to you.

      How you remain unmurdered is truly a mystery.

      1. One of my favorite bumper stickers:
        Some people are alive simply because it is illegal to kill them.

  5. Amputation to prevent gangrene from spreading and killing a person is just removing a limb, and to argue otherwise is dishonest.

    Everybody knows what a tariff is, just like everybody understands what amputation is. That doesn’t mean there is never a justification. Sometimes you have to do something ostensibly harmful in pursuit of a greater end. The choice between the lesser of two evils is frequent.

    And, fuck China. If you haven’t yet realized the CCP is an enemy, you never will.

  6. Yes they are. The whole point is to protect the domestic industry so that we don’t have to depend on the good graces of China to obtain steel. WTF do you think they were?

    1. So why don’t you send a check directly to USA steel instead to subsidize their costs?

      1. Or better yet sink investment funds into Alcoa and US Steel.

        It is a patriotic duty.

        1. Meh, they’re both in my Total US Stock Market index fund. 🙂

    2. Trump said he’d like no tariffs, providing our trading partners do the same; thus, is for free trade. The way I see it, is the US and our trading partners are playing the Ultimatum Game (look it up in Wikipedia), splitting up a (using as an example, multiply by billions) $1 in profit from mutually beneficial trade, and our politicians are willing to make a deal so the USA gets 1 cent of the profit, our trading partners get 99 cents of the profit, and the politicians have been getting favors like a seat on the board of company (they get paid lots of money and don’t do anything) or get business deals that put money in their pocket. Trump is putting an end to that, and working to get more like 50 cents of the trade profit for US exporters and importers. And working to end the theft of trade secrets, patent protections and other intellectual property. That’s what I see. The Chinese and many other foreigners have been paying off our corrupt politicians for the favor of not protecting US interests.

      1. So the way you put it, political influence is involved all up and down the tariff latter and you disapprove but when Trump applies political pressure that affects how and with who American manufacturers do business with then you’re ok with it. Did i get that right? It is the prerogative of the American manufacturer how they want to apply their greed to turn a profit. It is you choice whether you want to participate in that economic process and government has no business getting involved. That’s the way i see it anyway.

        1. The government has a need to get involved when our enemies produce almost all of a commodity, that we will need if those enemies decide to go to war with us.

          1. So you’re not for free enterprise and free trade, got it. Most Americans care deeply about America up until they open their checkbook! That’s the reality and there’s not wrong with that.

    3. Yup. That’s the big picture here. China is an enemy and should be treated as such.

      Don’t buy into their bull shit Bambi eyes schemes.

      When you call them out you will see Predator.

  7. Time for a remote meeting of Libertarians For Tariffs!

    Why not schedule a joint meeting with Libertarians For Authoritarian, Bigoted, Cruel Immigration Practices?

    1. “Libertarians For Authoritarian, Bigoted, Cruel Immigration Practices”

      Good call, Art. I bet those are the type of phony “libertarians” who would support a President who literally put kids in cages.

      #IMissObama

    2. Then they’d just be run of the mill democrats like Bill Clinton, Joe Biden, and Bernie Sanders.

  8. I’m not sure that headline isn’t tautological – protecting a domestic steel industry so that in case steel is needed for war purposes it’s right here handy is a national security purpose. What’s there to prove?

    The problem is that nearly everything can be classified the same way – from the strategic oil reserve to the strategic maple syrup reserve – and once you accept that it’s critical for the future war effort (and you know there’s always going to be a future war) well then that certainly justifies paying a price of whatever it costs to maintain a domestic supply, doesn’t it? How can you put a price on our nation’s future security? And never mind looking to see if there are cheaper or better ways to ensure a secure supply in the event it’s needed – the current suppliers are just fine with the subsidized price and the market entry restrictions they’ve paid lobbyists to acquire just fine, thank you very much. Crony capitalism is the American way of doing business!

    1. Crony capitalism is the American Everyone’s way of doing business!

  9. Special exemptions for special people, from The Donald and Minions, to escape steel-import taxes? To be had only by important executives who (on the sly) pay for some “play time” with Stormy Daniels, for The Donald? COLOR ME SHOCKED!!!

    It’s kinda like washing machines and some other goods too…

    https://reason.com/2019/04/22/trumps-washing-machine-tariffs-cleaned-out-consumers/
    Trump’s Washing Machine Tariffs Cleaned Out Consumers
    A new report finds the tariffs raised $82 million for the U.S. Treasury but ended up increasing costs for consumers by about $1.2 billion.

    PROTECTIONISM DOESN’T WORK!!! DUH!!!

    Protect American washing-machine makers from Chinese competition? The FIRST thing that American washing-machine makers do, is jack UP their prices… AND the prices of dryers to boot, too! To SOAK the hell out of all of us consumers!!!
    From the above-linked Reason article about washing machines…
    “All told, those tariffs raised about $82 million for the U.S. Treasury but ended up increasing costs for consumers by about $1.2 billion during 2018 … (deleted). Although the trade policy did cause some manufacturers to shift production from overseas to the United States in an effort to avoid the new tariffs, the 1,800 jobs created by Trump’s washing machine tariffs cost consumers an estimated $820,000 per job.”

    Summary: Nickels and dimes to the USA treasury; boatloads of pain for consumers. USA jobs created? Yes, at GREAT expense! Putting these 1.8 K workers on a super-generous welfare program would have been WAY better for all the rest of us! Plus, you know the WORKERS don’t make super-huge bucks (no $820,000 per job for THEM); the goodies flow to the EXECUTIVES at the top of the washing-machine companies! The same ones who play golf with The Donald, and join him for gang-banging Stormy Daniels! Essentially at our expense!

  10. Yeah, protectionism is bad, because trade with China has worked out so well.

    1. The Chinese have been dumping steel on the U.S. market depressing prices. You have to clean that up.

      Canada is at its knees when it comes to China. America can overwhelm China; Canada can’t. I have to hope the U.S. grabs our collars and drags us back to safety.

    2. Suicide is bad, because cutting off your arms and legs has worked out so well.

      That’s some pretty faint praise for any of the above, don’t you think?

      In your equations, how does FREE TRADE ALL AROUND rank in there? Can we talk about GOOD things?

  11. Clearly Joe Biden must be your choice then. Everyone who writes for this rag has bitched and complained incessantly for years about Trump’s policies. If you want them changed, you either wait him out, or vote for Biden.

    My hope is you are forced to fill out your tear stained ballot with that shagadellic serial sex abuser and dementia patient Biden.

    1. The demoncraps can get whomever they want to be president, with their VP pick, because Biden won’t last a year.
      But remember, when they had a sure-thing, after Nixon quit, the best they could come up with was Jimmy Carter, who was only eclipsed as the worst president of the last two centuries by the “first black president”.

  12. Tariffs have protected economies, standard of livings, and industries for longer than any of us have been alive and will be true forever.

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