Free Trade

More Than 53,000 American Companies Sought Exemptions From Trump's China Tariffs. Almost All Were Denied.

New GAO report says the process for determining which companies could avoid paying those tariffs was rife with "inconsistencies" and poorly documented decision-making.

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The bureaucratic process established by the Trump administration to determine which American companies should be exempted from paying tariffs on imports from China is a black box of "inconsistencies" and poorly documented decision-making, according to a new audit.

In a report published last week, the Government Accountability Office (GAO) cast a critical eye on the so-called "tariff exclusion process" created in 2018 as part of the Trump administration's efforts to slap tariffs on a wide range of imports from China. The process, overseen by the Office of the U.S. Trade Representative, allowed American businesses to appeal to the federal government for permission to not pay tariffs if they could demonstrate that a given product was not available from other sources, or if a business faced "severe economic harm" due to the tariffs.

Between 2018 and 2020, American businesses submitted more than 53,000 exclusion requests. The vast majority—87 percent—were denied, and most of the denials were on the grounds that the company failed to demonstrate sufficient economic harm to the Office of the U.S. Trade Representative, the GAO found.

In other words, federal bureaucrats reviewed tens of thousands of statements from companies pointing out how the Trump administration's tariffs would cause economic harm—because, yes, Americans paid for the tariffs—then discarded most of those requests because the harms were not "severe" enough.

What's even worse is that there's very little in the way of objectivity or due process afforded to companies that had their exclusion requests denied. Soon after the tariffs were imposed, members of Congress warned that the exclusion process lacked "basic due process and procedural fairness" and that it could be "abused for anticompetitive purposes." As Reason previously reported, 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 rulings.

The new GAO report confirms some of those concerns.

"USTR documented some procedures for reviewing exclusion requests. However, it did not fully document all of its internal procedures, including roles and responsibilities for each step in its review process," the GAO found. "Without fully documented internal procedures, USTR lacks reasonable assurance it conducted its reviews consistently."

A similar exclusion process was established by the Department of Commerce to handle the tariffs on steel and aluminum imports, and it was almost immediately captured by special interests. Domestic steel and aluminum manufacturers exerted "improper influence" over the opaque and confusing process, a 2019 inspector general report found.

Without an objective and well-documented decision-making process, government agencies handling tariff exclusion requests are inviting more of that influence. But even that is somewhat beside the point—because tariffs are always about protecting certain industries, and protecting certain industries always invites influence-peddling.

"There is no telling how much money companies spent seeking tariff exemptions, on top of the direct cost of Section 301 tariffs," says Bryan Riley, director of the free trade project at the National Taxpayers Union Foundation. "The process needs to be improved, or even better, the U.S. should drop the tariffs and look for more effective ways to deal with China."

NEXT: Something Important Is Missing From Elizabeth Warren’s Anti-Recall Ad in California

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  1. I’m starting to think that Boehm may have a thing against Trump.

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    3. I’m starting to think no one can criticize Trump even rightfully because you snowflakes are so butthurt about it.

    4. lol. Bum has had a terminal case of TDS for many a while now.

  2. No Taxation without Representation!

    Executive order taxation is unconstitutional.

    1. ^This is very true; Importers should *void* UN-Constitutional executive taxation orders – all of them. Until an actual bill is passed by Congress. And DACA should be *void* also until the same. And, and, and, and…. They wonder why citizens are starting to rebel to their autocratic monarchy.

      1. No, no. We’re good with DACA and illegal immigration.

  3. You want to know who suffered most because of Drumpf’s tariffs? I’ll tell you — it was Charles Koch, the billionaire who funds Reason.com.

    Drumpf’s draconian anti-billionaire policies (tariffs, “border enforcement,” etc.) made 2020 the most miserable year of Mr. Koch’s life. He truly hit rock bottom when his hard-earned fortune actually dropped below $50,000,000,000. Unacceptable!

    But like all great businessmen, he bounced back. The key to his recovery was simple: getting a Democrat in the White House. Now our benefactor’s net worth is above $60,000,000,000 and climbing.

    #GetReadyForTheKochComeback

  4. NO Tax for Foreign Importers!!!
    MORE Tax for Domestic Manufacturing!!!

    Ya; That sounds like a winner. /s

    1. Taxing imports and self sufficiency are the road to prosperity!

      1. So your vote for Biden must make you happy, right screetch?

        1. Not as happy as when your wife complains about you beating her while I tug her hair from behind.

  5. If “almost all” were denied, it sounds pretty consistent then.

  6. Well forget about political prisoners being held without trial or troops occupying they capital or police now demanding your papers if they see you outside or the 3 trillion dollar spending bill that will also expand the government’s grip on the economy even further or the unholy fusion between giant corporations and the government enabling unprecedented levels of mass surveillance or the admission by the current regime that speech it finds unfavorable will be stifled. Yes, the real problem is that a couple of years ago the Trump administration (legally) imposed tariffs on Chinese imports.

    1. Hell, the problem isn’t even that the current regime is also imposing tariffs on Chinese goods. The problem, to this day, is still solely the Bad Orange Man.

      1. But if Reason really is a mouthpiece for the Democrats, shouldn’t they be praising everything Biden does?

        You know, like how talk radio never found any fault in anything Trump did during his entire reign?

        Furthermore, shouldn’t you be praising Biden for continuing Trump’s policies?

        If everything is to be judged on who, not what, then be fucking consistent about it.

    2. Good point. I mean, Reason has run exactly zero articles at all about those other things you mentioned. Not a one.

    3. administration (illegally) imposed tariffs on Chinese, EU ,Canada, Indian, Mexican, South Korean…imports.

      FTFY

  7. The Biden inflation and soon to be terrible economy cannot be blamed on Trump or tariffs. You all should start looking into that, you know maybe before the next election.

    1. You must be new to the media blame game. They have already tacitly admitted that trump can time travel (blaming him for things that happened before he even announced he was running for president).
      Why do you think they won’t blame Biden failures on trump?

    2. I’d be ok if it continued by blaming it on the idiots not getting vaxxed. Want so bad to get back to normal but won’t do a goddamn thing to make that happen.

  8. So Biden revoked all of those tariffs as soon as he took office?

    I didn’t think so. Buzz off Boehm.

    1. So he can be blamed then too no?

      Or is that too much for your snowflake mind to comprehend?

      Don’t mind me- keep slobbing that trump knob like you have for the past 4 years.

      1. Piss off.

  9. Tariffs, excepting for covering the funding the cost of services which Customs needs to operate, should be dropped. Very, very, seldom do they help Americans, and, quite obviously, they can lead to cronyism and favoritism.

  10. I’m confused. Trump consistently enforced his tariffs and that caused a confused tangled mess? Is this the libertarian case for crony capitalism?

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  12. Tariffs are the only legitimate revenue stream that the Federal Government was meant to have. Read history, not Leftist BS.

  13. free trade and slave labor camps aren’t a great mix

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