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Commerce: Are companies ‘profiteering’ off tariffs?

Wednesday, June 20, 2018 - American Shipper Article
Import Customs Broker | Miami Import Services | U.S. Customs | Imports | Aluminum | Steel

 Recent prices of steel and aluminum increased in excess of Section 232 tariffs that started in March, and the Commerce Department is investigating whether companies are using the tariffs as justification to ultimately boost profits, Commerce Secretary Wilbur Ross said during a Senate Finance Committee hearing on Wednesday. 
   “What has been happening — and it’s a very unsatisfactory thing — there has been a lot of speculative activity,” Ross said. “Storing inventory, withholding product from the market, by various intermediary parties. So the price of steel, and for awhile the price of aluminum, went up far more than is justified by the tariffs, and so we’re starting an investigation into that, trying to find out whether there are people who illegitimately are profiteering out of the tariffs. There’s no reason for a tariff to increase the price of steel by far more than the percentage of the tariff.”
   Commerce in March started assessing global tariffs of 25 percent on steel imports and of 10 percent on aluminum imports, which expanded to the EU, Canada and Mexico on June 1, after the U.S. government lifted temporary country exemptions.
   The fact that there have been some price increases on steel products “clearly is not a result of the tariff; it’s clearly a result of antisocial behavior by participants in the industry,” Ross said.
   Sen. Chuck Grassley, R-Iowa, asked Ross when previously inactive domestic steel production facilities could come back online, adding that increased steel capacity could have downward pressure on prices in the U.S.
   Ross added that “it should be fairly quick” for those facilities to come back online, after U.S. Steel announced a few months ago the first production restart — of 1 million tons — and subsequently announced a second restart to produce 1.5 million tons.
   “It’s coming,” he said. “Exactly what month it will come, I don’t know. But right around the edge of the year, that problem should be pretty well-addressed by most of these new restarts of facilities.”
   Committee Chairman Orrin Hatch, R-Utah, asked Ross why his department isn’t granting exclusions for products from countries subject to Section 232 quotas.
   Ross noted that the presidential tariff proclamations don’t authorize the Commerce Department to grant such exclusions, but that Commerce is taking into consideration a request made for exclusions from quotas that have already been exceeded or shortly will be exceeded. 
   South Korea, Argentina and Brazil are subject to straightforward quotas and no tariffs.
   “The problem is that a number of countries rammed in a huge amount of product prior to the president’s decisions, and therefore, have put in much more than they had in the prior year,” he said. “So there’s an intellectual challenge as to whether or not to reward those countries that were trying to game the system.”