Trump Tariff Pandemonium – A sniff through Front-runners and Losers

A wave of unsettlement has erupted across the globe with fears of trade war haunting many geographies with the discussions on tariffs coming into picture every now and then. While many believe that regulations should be there, the same should not however debilitate the trade scenario to an extent that harms many businesses. The following gives a picture of what is turning off many companies in terms of their outlook and global presence in the prevailing tariff-stricken environment.

In March 2018, US introduced tariffs of 25% on steel and 10% on aluminum under Trump administration. They also set a process for US importers to request exclusions but many firms complained of facing hassles with bureaucracy and hazy decisions. Over 55% of the 933 decisions were reported by commerce department as of last week on requests for exclusions from the steel tariff, to be approved an exemption. The commerce department’s Bureau of Industry and Security granted 516 but rejected 417. As per regulations.gov, more than 16,000 requests came for exemptions from the steel tariff.

Some of the firms that have been granted tariff exemptions included Royal Dutch Shell that got tariff exemptions for their high-specification steel pipes which were able to resist adverse conditions in terms of pressures, temperatures and corrosive threats found in deep water oil and gas production. The firm argued that only Nippon Steel & Sumitomo Metal Corporation of Japan supplied a product that could meet these demands. Schick Manufacturing also got a waiver from the new tariff policy on imported steel and aluminum with exemption on flat-rolled strip of cold-rolled stainless 13C26 Blade Steel supplied by Sandvik while its flat-rolled strip of cold-rolled stainless AEB — L Blade Steel supplied by Voestalpine has been rejected for an exemption.

Greenfield Industries Inc. was noted to have submitted close to 1200 application requests for exemption with regards to the types of specialty steel imported from China. These products are used for preparing cutting tools at its US operation. The company was head bent on the reasoning that they have been the sole US producer of high speed steel material needed for cutting tools. Zapp was also in the list for a zinc-coated flat-rolled wire that it produces in Germany. The top player that received the largest number of exclusions granted was Greenfield Industries followed by American MSC Inc.

On the other hand, some of the firms that have been denied tariff exemptions included Plains All American that did not get a thumbs up from commerce department for their steel pipe import from Greece, made using an advanced manufacturing process. The department argued that a similar pipe was already produced in the US using an older technology. In this category, the biggest loser was Seba Tubular Ltd being highlighted to have largest number of exclusions denied; and was followed by Crompion International.

If one looks into detail, alternatives to products that can be produced/ developed domestically, have been under the scrutiny of degree 1. However, the process till now on exemptions has looked to be less transparent and inconsistent in terms of the actual methodology and decision-making used for exemption approvals given the varied nature of decisions with lesser explanations witnessed so far.

Another key aspect to note is that while commodities seem to be taking a hit and thus the companies dealing in that, the new safe-haven seems to be the technology sector that is generally free from physical movement of goods while some punting on US small-caps that have domestic focus is also gaining traction.

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