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Watchdog raises red flags about Trump tariff exemption process

An internal government watchdog has flagged the lack of transparency in the Trump administration’s tariff exemption process, saying it “contributes to the appearance of improper influence in decision-making.”

A memo published this week by the Department of Commerce’s inspector general said it found evidence that an unofficial appeals process exists and that communications with an objector prompted a change in the internal review criteria.

“We believe these issues give the perception that the Section 232 exclusion request review process is neither transparent nor objective,” the memo said.

The Department of Commerce has processed more than 80,000 requests from US importers asking for an exemption from the steel and aluminum tariffs imposed last year.

Companies may be granted an exemption if they can prove that they can’t get the item they need in the United States. But some importers have complained that the review process is opaque. To date, about 60,000 requests have been approved and 20,000 have been denied.

In a statement, the Department of Commerce said it “takes this alert seriously and looks forward to working with the Office of Inspector General to gain additional information about the underpinnings of their findings.”

It has taken steps to safeguard the process, including hiring dozens of contractors, adding an online portal for requests, and creating a more extensive rebuttal process and plans to further improve transparency.

The Trump administration started to impose tariffs on foreign steel and aluminum in early 2018 to protect domestic manufactures. It used authority under Section 232, which allows the administration to impose tariffs in the interest of national security.

President Donald Trump has made reviving American manufacturing, and specifically steel, a centerpiece of his presidency. At first, the tariffs gave the US steel industry a boost as the price of American steel jumped and production grew.

But now there are signs the industry is slowing amid softening global demand. About 1,600 jobs were created during the first six months of this year, compared with 2,800 during the last six months of 2018. US Steel cut its earnings outlook earlier this year and its shares are down 50% over the past year.

Meanwhile, a group of bipartisan lawmakers is pushing for legislation that would limit the President’s power to use Section 232 to impose tariffs.

Republican Rep. Jackie Walorski of Indiana has repeatedly pressured the Commerce Department to fix problems with the process, which she has called “a master class in government inefficiency and plagued by maddening inconsistency.”

On Wednesday, she called the inspector general’s memo “troubling.”

“There is no excuse for allowing an opaque, inconsistent, and unfair process to continue harming American manufacturers,” she said in a statement.

In May, the President lifted the duties on steel and aluminum from Canada and Mexico, removing a key hurdle to the ratification of his replacement for the North American Free Trade Agreement. The new deal still needs a vote in the US Congress. The tariffs remain in place on other foreign steel.

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