Local Manufacturers Seeking Exemption From Steel & Aluminum Tariffs

Apr 30, 2018

In less than a month, the U.S. Department of Commerce will make a decision on whether or not they will be excluding certain American companies from the effects of the Trump administration’s proposed tariffs. Some Pittsburgh-area businesses are hoping to get on the list.

Following President Trump’s announcement of steel and aluminum tariffs on March 1, the Commerce Department released guidelines for applications in a press release a month ago. The release stated that domestic companies that depend on imports of aluminum or steel are eligible to submit an application to be exempt from the proposed tariffs, which began with a 25 percent tax on steel and 10 percent on aluminum.

The agency is set to make their decision May 18, and say they will judge the applications based on whether they are a threat to national security, which was the initial underlying reason for the creation of tariffs in the first place. Among the companies requesting an exemption is Woodings Industrial Corp., headquartered in Mars, PA.

The company filed its request for a steel exemption April 6, stating “Woodings Industrial Corporation cannot produce this particular product and this particular product has not been produced in the United States for more than 10 years. There is no substantial material produced by any mills in North America,” in its application. It also reported that it used an average 1,595,050 kg of the steel product annually for which it's seeking the exemption.

According to its website, the company serves about 60 customers, including Allegheny Power and General Electric.

Robert Woodings, president of Woodings Industrial Corp., said they have already begun to see the effects of the tariffs, and it is important that they receive an exemption.

“We don’t have a domestic supply [of the product] and we’re not going to find one. Without the exemption, I’m not even sure if we’d be able to produce the product we need,” he said. “It’s not a big part of our operations, but it’s a big enough part that it’s important.”

The initial proposition of steel and aluminum tariffs have sparked a series of retaliatory trade restrictions from China, and caused a panic among manufacturers and economists who fear that the U.S. is on the verge of a trade war with the world’s second largest economy.

This raises several questions, according to Lee Branstetter, an economics and public policy professor at Carnegie Mellon University, one of which revolves around what the actual definition of a trade war is.

“A reasonable and meaningful definition would be a situation in which two trading partners create very substantial trade barriers to the exports of the other country," said Branstetter. "And certainly, what Donald Trump has threatened and what the government of China has threatened in return meet that definition.”

According to Branstetter, if the current tensions between China and the United States push both governments to act on the proposed threats, a trade war is inevitable.

“If you’re an exporter to another country, and that country places larger tariffs on your goods, than that makes you fundamentally less competitive in that market…an indiscriminate trade war is one of those cures that’s worse than the disease it is meant to cure.”

Branstetter said the effects of a trade war are already being seen in Pittsburgh. He pointed to CP Industries, a local firm based in McKeesport, that relies on Chinese steel imports to make its products.

“Steel tariffs, if they were widely applied, would be to raise the domestic cost of steel and aluminum and undermine the economics of the businesses that use them as an input, just as CP Industries in McKeesport is being undermined,” he said. “I’m sure that Donald Trump didn’t intend to undermine CP Industries when he laid out those tariffs, but he is.”

CP Industries, a 120-year-old company whose customers range from the U.S. Navy to NASA, said in a statement reported by the Post-Gazette that “The current set of rules produces a noncompetitive environment skewed heavily toward the Chinese manufacturer that leaves CPI in an untenable position.”  In the same statement, it said they also planned to apply for a Commerce Department exemption.

Pennsylvania Senators Pat Toomey (R) and Bob Casey (D) disagreed on the subject of the initial steel and aluminum tariffs, with Toomey opposed and Casey in favor. Branstetter said he was “disappointed” with Sen. Casey’s stance.

“To be honest, I think it took quite a bit of courage on the part of Senator Toomey to come out against these tariffs even though he represents a steel state, and I really wish that Senator Casey had come out with a different statement,” Branstetter said.

Woodings takes the opposite view and agrees with Sen. Casey, despite the effects that the tariffs have had on his business.

“It’s just one man’s opinion, but we’ve been in this business a long time. Tariffs are tough, but in the long term it should have a positive impact on our industry and in our region specifically,” Woodings said. “Having seen the destruction of the US steel industry…I understand the pain and suffering that has taken place for the US steelworker.”