WASHINGTON -- U.S. senators criticized Commerce Secretary Wilbur Ross for investigating possible trade action on auto imports and the Trump administration's decision to slap steep tariffs on steel and aluminum for national security reasons, saying the moves are hurting U.S. businesses and relations with allies.
They also repeated concerns about the department's process for granting tariff exclusions to manufacturers that can't find domestic steel and aluminum products in the quality and amount needed, saying it is too slow, cumbersome and unfair.
The statements of Republican senators, in particular, were notable for how bluntly they opposed the administration's trade policy after 18 months in which few have challenged President Donald Trump on most issues.
"Mr. Secretary, as you consider these tariffs, know that you are taxing American families, you are putting American jobs at risk and you are destroying markets -- both foreign and domestic -- for American businesses of all types, sorts, and sizes," Finance Committee Chairman Orrin Hatch, R-Utah, told Ross at a hearing, adding that the average cost of a car would increase $5,800 if a 25 percent tariff on autos and auto parts is imposed.
"Though supposedly pursued for national security reasons, tariffs on cars and trucks target our closest allies -- namely Europe, Canada, Mexico, Japan and South Korea -- while allowing China to continue its predatory trade policies undeterred," Hatch said.
Higher cost, lower supply
American manufacturers are already suffering from increased cost and decreased supply of steel and aluminum because of tariffs and quotas, and farmers will suffer as trade partners retaliate against them, he said. Construction of a major chemical plant in Pennsylvania has slowed because essential parts are being held up by U.S. Customs because of the steel quotas.
Only two investigations under Section 232 of the Trade Expansion Act of 1962 have taken place into the effects of specific imports on national security and the only resulting action occurred in 1979 when President Jimmy Carter imposed an embargo blocking imports of crude oil from Iran and Libya.
Ross defended the action as necessary to ensure domestic industry can meet national defense requirements, but Hatch noted that the Defense Department opposed global tariffs and that they fail to address the root problem -- Chinese overproduction.
The secretary announced that the Commerce Department has made its first determinations on 98 exclusion requests for steel products, granting 42 and denying 56. He claimed the department has significantly reduced the backlog of applications and will begin posting batches of exclusion decisions each day, although he acknowledged few will be granted because they have no substance or objections with merit.
The department has received 22,506 requests for exemptions from steel and aluminum tariffs, with 9,200 posted online so far for public review and comment. It has also received 4,037 objections to exclusion requests. Companies must submit waiver applications on each product they import. Differences in width, gauge, strength and other characteristics mean importers must submit multiple requests for similar products.
'Bureaucratic twilight zone'
Auto suppliers are among those impacted by the steel and aluminum tariffs and many are seeking waivers.
Hatch complained that companies can't easily file rebuttals to objections from other parties.
"Review of exclusion requests and related objections is being conducted on a case-by-case basis in a fair and transparent process. Commerce is making an unprecedented effort to process the requests expeditiously," Ross said. "The public comment period on the interim final rule ended on May 18, and we are reviewing the comments received to assess whether any revisions to the process are necessary."
He also said the administration is considering reversing its decision to grant waivers for steel and aluminum products imported from countries subject to quota (South Korea, Argentina, Brazil for steel; Argentina and Brazil for aluminum) irrespective of whether the product is produced in the U.S.
"Your charts notwithstanding, America's small businesses believe they are being held hostage in a bureaucratic twilight zone waiting to see if they are going to escape," ranking member Ron Wyden, D-Ore., said.
He demanded Ross provide the committee within a week a specific plan and timetable for fixing the waiver process.
"I don't think your department did a lot of homework on the front end. You all planned on receiving 6,000 applications for exclusions," he said.
A senior Commerce Department official validated that concern Tuesday, anonymously telling The Washington Post that the process is "going to be so unbelievably random, and some companies are going to get screwed. These people are making multibillion-dollar, unbelievably uninformed decisions."
Trade attorneys and companies have told Automotive News that the Commerce Department appears overwhelmed with applications. The Post's source said evaluators are still being trained and contractors being hired, and many lack the technical expertise to make informed decisions.
'Transparent and fair'
Ross dismissed the criticism, saying he doesn't take seriously comments from unnamed sources who "are probably disgruntled." He blamed Congress for not fully funding the appropriations request for extra evaluators and quickly approving the money as the reason why some people are still being trained.
"It sounds to me that we've got a government-run mercantilist economy as opposed to a free-market economy," Sen. Charles Grassley, R-Iowa, chimed in after Ross described the exclusion process.
As for the auto tariffs, Ross said no decision has been made. Stakeholders have been given an additional week to submit their feedback.
"So we are trying to go about this in a very judicious, transparent and fair manner. We will try our very best to avoid any unintended consequences" such as including truck parts in any tariff order, he said.
The Wall Street Journal reported that German automakers are willing to have the European Union drop its 10 percent import tariff for autos in exchange for the U.S. removing its 2.5 percent tariff on autos and the threat of a 25 percent import tariff.