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Tuesday, April 24, 2018, 14:10
Aimed at China, US tariffs are hitting closer to home
By Associated Press
Tuesday, April 24, 2018, 14:10 By Associated Press

A forklift moves steel pipes at the Borusan Mannesmann plant in Baytown, Texas, April 23, 2018. The US Commerce Department has received more than 2,400 applications from companies seeking waivers from the administration's tariffs on steel and aluminum imports, which may result in duty payments of millions of dollars for larger businesses.  (LOREN ELLIOTT / AP)

WASHINGTON — US President Donald Trump's escalating dispute with China over trade and technology is threatening jobs and profits in working-class communities where his "America First" agenda hit home.

The Commerce Department has received more than 2,400 applications from companies seeking waivers from the administration's tariffs on steel and aluminum imports

The Commerce Department has received more than 2,400 applications from companies seeking waivers from the administration's tariffs on steel and aluminum imports, which may result in duty payments of millions of dollars for larger businesses. 

The department has begun posting the requests online for public comment; several of the applications released so far suggest deep misgivings with Trump's protectionist strategy, especially in areas where he won strong support during the 2016 election.

The tariffs are aimed primarily at China for allegedly flooding the global market with cheap steel and aluminum. But they've also led to confusion and uncertainty, according to Associated Press interviews and a review of records. 

READ MORE: Fears of trade war after US decides to levy tariffs on China

In Oklahoma, Texas and Wisconsin, for example, businesses operating in the furniture, energy and food sectors have outlined the financial difficulties they'd face if they're not excused from the steel tariff.

In Okmulgee, Oklahoma, dozens of jobs hang in the balance as office furniture giant Steelcase waits to hear back from the Commerce Department.

A Steelcase subsidiary, PolyVision, operates a plant in Okmulgee that uses a special type of steel from Japan to manufacture a durable glass-like surface for whiteboards and architectural purposes. PolyVision "cannot and will not be able to procure" from US companies the cold-rolled steel it requires "in a sufficient and reasonably available amount or of a satisfactory quality," Steelcase said.

Trump won most of the votes cast for president in Okmulgee County. Without a waiver, Steelcase warned, the "economic viability of PolyVision (and) the small town of Okmulgee" would be jeopardized.

ALSO READ: US-China trade frictions likely to undermine ties, says envoy

The tariffs — 25 percent on imported steel and 10 percent on imported aluminum — are designed to protect and rebuild the US companies that manufacture the metals. The US temporarily exempted several major trading partners, including the European Union, Mexico and Canada.

This undated photo shows an employee polishing the surface of steel products at Dongbei Special Steel Group Co Ltd in Dalian, Liaoning province, China. (LIU DEBIN / FOR CHINA DAILY)

China, which was left on the target list, retaliated by imposing tariffs on US$3 billion in US products, including apples, pork and ginseng.

Trump responded by adding more protectionist measures regarding the intellectual property issue. And Beijing punched back by proposing tariffs on US$50 billion in US products including small aircraft and soybeans — a direct threat to rural areas that were key to Trump's victory.

John Hritz, CEO of JSW Steel USA in Baytown, Texas, said his company is in lockstep with Trump's approach. "We're in favor of growing the steel industry in this country," Hritz said. JSW Steel, owned by Indian conglomerate JSW Group, is embarking on a US$500 million overhaul of the plant that it says will create hundreds of jobs.

The growth would be welcomed in Baytown, where unemployment is 9.8 percent, more than double the national rate. 

The future is much murkier for another Baytown steel business, Borusan Mannesmann Pipe. Without a waiver, Borusan may face tariffs of US$25 million to US$30 million annually if it imports steel tubing and casing from its parent company in Turkey, according to information the company provided to the AP.

Borusan said the Baytown production line would no longer be competitive and "jobs would be threatened" if it cannot import 135,000 metric tons of steel annually over the next two years. The pipes Borusan produces are used primarily as casing for oil and natural gas wells.

This photo shows machinery used to uncoil steel in preparation for creating pipes at the Borusan Mannesmann steel pipe plant in Baytown, Texas, April 23, 2018. (LOREN ELLIOTT / AP)

But if Commerce says yes, Borusan will be able to unlock a US$25 million investment in the Baytown facility as it seeks to become a "100 percent domestic supplier," according to the waiver request.

Seneca Foods Corporation, the nation's largest vegetable canner, said in its waiver application that it's unclear, at best, if US suppliers have the ability or willingness to expand their production in the long term to meet the company's annual demand for tinplated steel.

But "clearly they cannot meet demand in the short term," Seneca told Commerce officials. That means Seneca has to buy a portion of what it needs from overseas.

A person with knowledge of Seneca's situation said the company would face a US$2.25 million duty if the Commerce Department doesn't approve its waiver request for 11,000 metric tons of tinplate it already agreed to purchase from China. 

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