U.S. handling of tariffs raises appearance of 'improper influence': watchdog

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© Reuters. Water runs off a steel coil as it is unrolled on the line at the Novolipetsk Steel PAO steel mill in Farrell, Pennsylvania© Reuters. Water runs off a steel coil as it is unrolled on the line at the Novolipetsk Steel PAO steel mill in Farrell, Pennsylvania

By Andrea Shalal

WASHINGTON (Reuters) – Lack of transparency in the Commerce Department’s handling of steel and aluminum tariffs raised the appearance that certain companies may have had “improper influence” in the process, its internal watchdog said in a document made public on Wednesday.

The Commerce Department’s inspector general said it uncovered multiple risks during an audit of processes used by two agencies within the department – the Bureau of Industry and Security (BIS) and the International Trade Administration (ITA).

It found evidence that the department had an unofficial appeals process; changed its internal review criteria after communicating with a company that objected to an earlier decision; and failed to document off-the-record discussions.

In a management alert dated Oct. 28 and made public Wednesday, the IG’s office said it found “a lack of transparency that contributes to the appearance of improper influence in decision-making for tariff exclusion requests.”

The report comes amid growing concern about President Donald Trump’s tariff policies and their negative impact on global growth. Democratic presidential candidate Elizabeth Warren and other lawmakers have also raised concerns about conflicts of interest, and backlogs in processing requests for exclusions.

Trump imposed 25% tariffs on imported steel and 10% tariffs on imported aluminum in March 2018 based on national security grounds, citing Section 232 of the 1962 Trade Expansion Act.

Representative Jackie Walorski, a Republican from Indiana and fierce critic of the department’s handling of the exclusions process, said the IG’s findings confirmed the serious problems plaguing the system.

“There is no excuse for allowing an opaque, inconsistent, and unfair process to continue harming American manufacturers,” she wrote, adding that the Trump administration had “a thumb on the scale favoring objectors.”

Companies can request exemptions from the Section 232 tariffs for certain products if they are not available domestically. The exclusions are made on a case-by-case basis, but other companies can object to the exclusions being granted.

The Commerce Department has received over 135,000 exclusion requests and 43,000 objections, according to a letter from the department to Walorski that was seen by Reuters.

The IG’s office said Commerce should make the process more transparent by setting up a formal appeals process, creating a process for modifying internal criteria for judging exclusion requests, and documenting discussions with interested parties.

The Commerce Department said it had already taken key steps to “safeguard” the system, including hiring dozens of contractors, an online portal for requests, a “robust rebuttal process” and guidance for communications with stakeholders.

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