U.S. GOVERNMENT PUBLISHING OFFICE

33–808 WASHINGTON : 2019

COMMERCE SECRETARY ROSS 

HEARING 

BEFORE THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

SECOND SESSION 

MARCH 22, 2018 

Serial No. 115–FC09 

Printed for the use of the Committee on Ways and Means 

( 

ii 

COMMITTEE ON WAYS AND MEANS 

KEVIN BRADY, Texas, Chairman 

SAM JOHNSON, Texas 

DEVIN NUNES, California 

DAVID G. REICHERT, Washington 

PETER J. ROSKAM, Illinois 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

LYNN JENKINS, Kansas 

ERIK PAULSEN, Minnesota 

KENNY MARCHANT, Texas 

DIANE BLACK, Tennessee 

TOM REED, New York 

MIKE KELLY, Pennsylvania 

JIM RENACCI, Ohio 

PAT MEEHAN, Pennsylvania 

KRISTI NOEM, South Dakota 

GEORGE HOLDING, North Carolina 

JASON SMITH, Missouri 

TOM RICE, South Carolina 

DAVID SCHWEIKERT, Arizona 

JACKIE WALORSKI, Indiana 

CARLOS CURBELO, Florida 

MIKE BISHOP, Michigan 

DARIN LAHOOD, Illinois 

RICHARD E. NEAL, Massachusetts 

SANDER M. LEVIN, Michigan 

JOHN LEWIS, Georgia 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

JOSEPH CROWLEY, New York 

DANNY DAVIS, Illinois 

LINDA SA ́ NCHEZ, California 

BRIAN HIGGINS, New York 

TERRI SEWELL, Alabama 

SUZAN DELBENE, Washington 

JUDY CHU, California 

DAVID STEWART, Staff Director 

BRANDON CASEY, Minority Chief Counsel 

iii 

C O N T E N T S 

Page 

Advisory of March 22, 2018, announcing the hearing .......................................... 2 

WITNESS 

Honorable Wilbur L. Ross, Secretary, Department of Commerce ....................... 6 

QUESTIONS FOR THE RECORD 

Questions from Ways and Means Committee Ranking Member Neal to Secretary Ross ............................................................................................................ 46 

Questions from Trade Subcommittee Ranking Member Pascrell to Secretary 

Ross ....................................................................................................................... 51 

Questions from Representative Jenkins to Secretary Ross .................................. 54 

Questions from Representative Paulsen to Secretary Ross ................................. 56 

Questions from Representative Black to Secretary Ross ..................................... 63 

Question from Representative Higgins to Secretary Ross .................................... 65 

Question from Representative Sewell to Secretary Ross ...................................... 66 

Questions from Representative Meehan to Secretary Ross ................................. 67 

Questions from Representative Holding to Secretary Ross .................................. 70 

Question from Representative Jason Smith to Secretary Ross ........................... 72 

Questions from Representative Walorski to Secretary Ross ................................ 72 

Questions from Representative Curbelo to Secretary Ross .................................. 77 

SUBMISSIONS FOR THE RECORD 

Alliance for Competitive Steel and Aluminum Trade (ACSAT) ........................... 81 

Acuity Brands, Incorporated ................................................................................... 83 

American Fuel & Petrochemical Manufacturers (AFPM) .................................... 85 

Air-Conditioning, Heating, & Refrigeration Institute (AHRI) ............................. 91 

Amgraph Packaging, Incorporated ......................................................................... 97 

Morris, Manning & Martin, LLP, on behalf of Bekaert Corporation, Kiswire 

America, and Tokusen USA ................................................................................ 99 

Bemis Company, Incorporated ................................................................................ 104 

Berry Global, Incorporated ..................................................................................... 106 

Electronic Privacy Information Center (EPIC) ...................................................... 107 

Flexible Packaging Association (FPA) .................................................................... 110 

Associations Dealing with the Energy Sector and Pipelines including the 

Association of Oil Pipe Lines (AOPL), Interstate Natural Gas Association 

of America (INGAA), GPA Midstream Association, Energy Equipment and 

Infrastructure Alliance (EEIA), Natural Gas Supply Association (NGSA), 

Center for LNG (CLNG), American Petroleum Institute (API), and the 

Independent Petroleum Association of America (IPAA) ................................... 116 

Learning Resources, Incorporated (LR) ................................................................. 118 

MillerCoors ............................................................................................................... 122 

Precious Metals Association of North America (PMANA) .................................... 127 

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COMMERCE SECRETARY ROSS 

THURSDAY, MARCH 22, 2018 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

Washington, DC. 

The Committee met, pursuant to notice, at 9:04 a.m., in Room 

1100, Longworth House Office Building, Hon. Kevin Brady [Chairman of the Committee] presiding. 

[The advisory announcing the hearing follows:] 

2 

ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

FOR IMMEDIATE RELEASE CONTACT: (202) 225–3625 

Thursday, March 22, 2018 

FC–09 

Chairman Brady Announces Hearing with 

Commerce Secretary Ross 

House Ways and Means Chairman Kevin Brady (R–TX), announced today that 

the Committee will hold a hearing with Secretary of Commerce Wilbur Ross on 

trade matters within Commerce’s purview, particularly the section 232 determinations on steel and aluminum. The hearing will take place on Thursday, March 

22, 2018, in room 1100 of the Longworth House Office Building, beginning 

at 9:00 a.m. 

In view of the limited time to hear the witness, oral testimony at this hearing 

will be from the invited witness only. However, any individual or organization may 

submit a written statement for consideration by the Committee and for inclusion in 

the printed record of the hearing. 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person(s) and/or organization(s) wishing to submit written comments for the hearing record must follow the appropriate link on the hearing page 

of the Committee website and complete the informational forms. From the Committee homepage, http://waysandmeans.house.gov, select ‘‘Hearings.’’ Select the hearing for which you would like to make a submission, and click on the link entitled, 

‘‘Click here to provide a submission for the record.’’ Once you have followed the online instructions, submit all requested information. ATTACH your submission as a 

Word document, in compliance with the formatting requirements listed below, by 

the close of business on Thursday, April 5, 2018. For questions, or if you encounter technical problems, please call (202) 225–3625. 

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing record. As always, submissions will be included in the record according to the discretion of the Committee. 

The Committee will not alter the content of your submission, but we reserve the right to format 

it according to our guidelines. Any submission provided to the Committee by a witness, any materials submitted for the printed record, and any written comments in response to a request for 

written comments must conform to the guidelines listed below. Any submission not in compliance with these guidelines will not be printed, but will be maintained in the Committee files 

for review and use by the Committee. 

All submissions and supplementary materials must be submitted in a single document via 

email, provided in Word format and must not exceed a total of 10 pages. Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official 

hearing record. 

All submissions must include a list of all clients, persons and/or organizations on whose behalf 

the witness appears. The name, company, address, telephone, and fax numbers of each witness 

must be included in the body of the email. Please exclude any personal identifiable information 

in the attached submission. 

Failure to follow the formatting requirements may result in the exclusion of a submission. All 

submissions for the record are final. 

3 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TDD/TTY in advance of the event (four business days’ notice is requested). 

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. 

Note: All Committee advisories and news releases are available at 

http://www.waysandmeans.house.gov

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Chairman BRADY. The Committee will come to order. Good 

morning. Today our Committee is honored to welcome Commerce 

Secretary Wilbur Ross to testify on recent trade actions, particularly section 232 determinations on steel and aluminum. 

Mr. Secretary, thank you for joining us. And we look forward to 

your testimony, which is very timely, with tariffs set to take effect 

on aluminum and steel tomorrow. 

Congress takes our constitutionally-mandated oversight role over 

trade policy very seriously. I have had the opportunity to exchange 

views with you, with President Trump, and other Administration 

officials recently on our shared urgent priority of addressing global 

over-capacity in aluminum and steel. 

Several Members of this Committee addressed that point in our 

hearing with Ambassador Lighthizer yesterday. We applaud the 

President for his leadership in insisting that we address this problem, and we know you have a key role. We are committed to working closely with you and the President to make sure we hit the target by dealing with the root problem of China’s persistent distortive policies, while minimizing collateral damage to our economy. 

Mr. Secretary, your vast experience in international business, 

and particularly in the steel sector, have prepared you well. You 

understand the complexity of modern supply chains we must take 

into account when considering how any enforcement action will affect every part of our economy. 

As you know 108 House Republicans joined Chairman Reichert 

and me in writing President Trump shortly before the Presidential 

proclamations were issued to urge him to take a targeted approach 

on any tariffs. 

We continue to highlight several priorities: Keeping tariffs targeted so they don’t affect fairly traded products or products that 

don’t pose a national security threat; using a process to allow U.S. 

companies to petition for and promptly obtain exclusions for imports unavailable from U.S. sources or that don’t pose a national 

security threat; grandfathering existing contracts so we don’t unfairly drive up costs of projects underway; reviewing tariffs on a 

short-term basis to consider if a different approach would better 

serve the U.S. national interest; and, of course, setting a termination date. 

I welcome the President’s commitment to flexibility and cooperation to our allies that trade fairly. The exclusion of Canada and 

Mexico is an important first step in such flexibility, and one that 

we strongly support. We can’t jeopardize our ability to incentivize 

other countries to cooperate on addressing our shared concerns 

with China. And we don’t want to encourage other countries to restrict our American exports. Instead, we have to tailor these tariffs 

4 

so Americans have certainty as they continue to trade fairly, sell 

American-made products to customers all over the world, and hire 

more workers here at home. 

I know you will be hearing from many Committee Members 

today about specific improvements they want to the product exclusion process to avoid risking jobs in their districts. In particular, 

as these tariffs go into effect tomorrow, I urge you to allow consolidation of petitions; retroactive application of exclusions to the date 

the petition was filed; and an exclusion period beyond the 1 year 

set out in your rules. 

I also oppose increasing tariffs on other products or countries as 

exclusions are made. These tariffs should be in place for the absolute minimum period, their effectiveness should be constantly studied. They should be sunset after a year. If they are not having the 

effect you intend, you should assess whether another policy would 

be more effective than continuing them. 

Tariffs are taxes, plain and simple, on American job traders and 

consumers. Their scope and their duration should never exceed 

what is needed to accomplish their goal. 

Along those lines I also want to address the potential for section 

301 tariffs. I am just as frustrated—I think we all are—just as the 

Administration is, with China’s blatant theft of America’s intellectual property, and increasingly devious ways in which it steals or 

otherwise obtains our very best technology. 

But we need the right remedy, not one that punishes American 

family, workers, and small businesses by putting new taxes on the 

products they buy. We don’t want to punish Americans for China’s 

misbehavior. At the very least, I urge the Administration to provide a strong opportunity for public comment, so the effect of tariffs 

on our economy can be properly assessed. That would allow us to 

design our policies to hit the right target, China, not Americans, 

who are dependent on us to look out for them. 

In 2015 Congress passed strong new trade enforcement tools. I 

am very encouraged to see the President’s dedication to strict enforcement of trade rules by putting into action these new enforcement tools passed by Congress, including by ensuring U.S. industries can benefit from trade remedy laws, and we can address circumvention and evasion of trade remedy orders. 

Secretary Ross, I look forward to continuing our work together 

on a pro-growth agenda that creates jobs and grows paychecks. We 

have already had great success in improving the lives of all Americans through tax cuts and balanced regulation. We have to build 

on this success with an ambitious pro-growth agenda that doesn’t 

merely buy American; it allows us to sell American all throughout 

the world. 

Mr. Secretary, we look forward to your testimony. 

And I will yield to the distinguished Ranking Member, Mr. Neal, 

for the purposes of his opening statement. 

Mr. NEAL. Thank you, Mr. Chairman. 

Welcome, Secretary Ross. Today’s hearing is an opportunity for 

us to hear from you directly about the steel and aluminum tariffs 

that are scheduled to go into effect tomorrow, and details about the 

processes for exclusions and exemptions that are still ongoing. 

5 

We know that the steel and aluminum industries in the United 

States have been struggling for many years. We also know that the 

situation is the direct result, in many instances, of unfair practices 

from trading partners. China has been the most flagrant bad actor. 

Many of their steel and aluminum companies are really just extensions of the Chinese government that benefit from massive government subsidies. 

In 2000 China’s steel capacity was just over 100 million tons, 

roughly the same as the United States. Today, it is 1.2 billion tons, 

more than 10 times as high as U.S. capacity, and more than the 

total capacity of the United States, European Union, Japan, and 

Russia, combined. 

Chinese industrial policies have led to massive amounts of overcapacity in both steel and aluminum industries. Global markets 

have been flooded and the price of both commodities has dropped 

so low that firms playing by the rules can hardly compete. The situation has put our workers and firms in an unsustainable position. 

They deserve strong action and support from our government. 

In response to these issues, the Administration has announced 

that it will impose a 25 percent tariff on steel imports and a 10 

percent tariff on aluminum products. These tariffs are set to take 

effect tomorrow. I understand why our steel and aluminum producers and workers are excited about the tariffs. The tariffs represent relief that they have been waiting for, in some instances, for 

years. We hope that it will allow them to rebuild, restart, and, indeed, rehire. 

I am also concerned, however, that the relief promised by the tariffs will be watered down to the point of not being effective. And 

I am concerned that the way this action was rolled out will discourage cooperation from the international partners that we need in 

the fight over China’s capacities. 

We have a lot of questions about how the Administration will 

proceed in coming weeks and months. We posed many of them already to Ambassador Lighthizer yesterday, and we understand 

that you and your Department have a different role in these investigations and in the administration of the exemption and exclusion 

processes. 

We are particularly interested in when the country exemptions 

and product exclusion decisions will be made, and when and where 

and how they will be made effective. 

Once exemptions and exclusions are applied, we want to know 

how the tariffs will be able to provide the promised relief, and 

whether the tariff levels will be adjusted upward to account for exemptions and exclusions. 

I would also like to know what the Administration’s plan is for 

monitoring whether the tariffs are working, and how the Administration would modify the relief to adjust for real world effects. 

We also would like to have you focus on what the Administration’s vision is for how the steel and aluminum tariffs will contribute to a multilateral, coordinated strategy for counteracting the 

global overcapacity crisis and, certainly, how long the Administration envisions these tariffs would need to be in place to address the 

national security threat that your Department has found. 

6 

I hope you can provide, Mr. Secretary, clarity on these issues 

over the course of our hearing this morning. 

Thank you, Mr. Chairman. 

Chairman BRADY. Thank you. Without objection, other Members’ opening statements will be made part of the record. 

Today’s sole witness is Secretary Ross. 

Mr. Secretary, the Committee has received your written statement. It will be made part of the formal hearing record. You have 

reserved 5 minutes to deliver your oral remarks. Mr. Secretary, you 

are welcome. We are pleased and honored that you are here. You 

may begin when you are ready. 

STATEMENT OF HONORABLE WILBUR L. ROSS, SECRETARY, 

DEPARTMENT OF COMMERCE 

Secretary ROSS. Thank you very much, Mr. Chairman, Mr. 

Ranking Member, and Members of the Committee. I thank you 

very much for the opportunity to speak with you today, and for 

your input as we implement bipartisan trade policies that protect 

and defend American families, American workers, and American 

businesses. 

This President has made it clear that his first priority is keeping 

the American people safe. He has also made it clear that he will 

not tolerate unfair trading practices that weaken our internal economy to the point where they threaten to impair our national security. 

I initiated the steel and aluminum 232 investigations in April 

2017, and the President signed two memorandums that month directing me to proceed expeditiously to conduct these investigations 

and report my findings. I submitted my reports to the President in 

January. The reports found that high levels of import penetration 

are adversely impacting the economic welfare of our domestic steel 

and aluminum industries. We have seen plants closed or idle, with 

attendant loss of jobs, skilled workers, and research and development. 

The reports also found that global excess capacity is a circumstance that makes it likely that continued high level of imports 

would cause further closures. This all would place the United 

States at risk of being unable to produce sufficient steel and aluminum to meet demands for national defense and critical infrastructure in an emergency. 

For example, there is only one remaining U.S. producer of steel 

used in electric transformers, a type of critical infrastructure, and 

only one high-volume producer of armor plate used in military vehicles and ships. Similarly, there is only one high-volume producer 

of the high-purity aluminum needed for defense and aerospace applications. 

The problem is that products with national security and critical 

infrastructure applications account for only a small part of overall 

steel and aluminum consumption, and therefore are not enough on 

their own to sustain healthy, innovative steel and aluminum industries. Thus, I recommended that the President take one of several 

different actions to curb imports, and thus ensure the long-term viability of our Nation’s steel and aluminum industries. 

7 

On March 8th, President Trump exercised his authority under 

section 232 of the Trade Expansion Act of 1962, as amended, to impose a 25 percent tariff on steel imports, and a 10 percent tariff 

on aluminum imports. The tariff actions taken by the President are 

necessary to defend America’s essential steel and aluminum industries against imports that harm our domestic industry to the point 

that they threaten to impair our national security. 

The President’s 232 decisions are the result of a long and well 

thought-out inter-agency process led by the Commerce Department, 

where we studied the causes of the current circumstances and the 

impacts of our actions. On March 23rd, tomorrow, the U.S. Customs and Border Protection will begin implementing the tariffs. 

So where do we go from here? We have already announced a 

process whereby domestic industry can be excluded from the tariffs, 

based on national security concerns or a lack of domestic supply of 

a quality product. Our intention is to implement these tariffs in a 

way that minimizes undue negative effect on downstream industries, while also weighing the national security needs of our military and our critical infrastructure. 

The President has also announced that he is suspending the tariffs for products from Canada and Mexico pending negotiations that 

would yield satisfactory alternative means to address the threatened impairment to U.S. national security. 

We also intend to enter discussions with the EU on behalf of 

their member countries and any country wishing to make such an 

arrangement. The President also maintains further authority to 

alter the tariffs at any time, based on national security and other 

considerations. 

As I said in the beginning, our top priority is the security and 

safety of every American. And that will continue to guide us, going 

forward. 

That was just a brief overview, but I look forward to getting into 

more specific questions and more detail as I respond to your inquiries. Thank you. 

[The prepared statement of Secretary Ross follows:] 

8 


33808A.001

Statement of 

Wilbur L. Ross 

Secretary of Commerce 

Before the 

Committee on Ways and Means 

U.S. House of Representatives 

March 22, 2018 

Chainnan Brady, Ranking Member Neal, and Members of the Committee: 

On March 8, President Trump exercised his authority under Section 232 of the Trade Expansion 

Act of 1962, as amended, to impose a 25 percent tariff on steel imports and a I 0 percent tariff on 

aluminum imports, with exemptions for Canada and Mexico, in order to protect our national 

security. The President's Section 232 decisions are the result of a long and well-thought-out 

process led by the Commerce Department, after review and comment through the usual 

Administration clearance process. On March 23, the U.S. Customs and Border Protection (CBP) 

will begin collecting the taritis. 

Today the United States has only one steel mill that can produce the advanced alloys used in 

armored vehicle plating; one aluminum smelter that makes the high grade aluminum needed for 

defense aerospace applications; and one steel mill that makes certain material needed for certain 

critical infrastrucntre, like electrical transfom1ers. The tariff actions taken by the President are 

necessary to protect America's essential steel and aluminum industries which have been banned 

by imports to the point that allowing inlports to continue unchecked threatens to inlpair our 

national security. These imports stem from a variety of reasons, including industrial export 

policies of our trading partners, unfair trade practices, and massive global excess production, 

particularly by China. 
9 


33808A.002

I initiated the steel and aluminum Section 232 investigations in April 2017 and the President 

signed two memorandums tbat montb directing me to proceed expeditiously to conduct these 

investigations and report my findings. Section 232 investigations include consideration of: 

domestic production needed for projected national defense requirements; domestic industry's 

capacity to meet tbose requirements; the existing and anticipated availabilities of human 

resources, products, raw materials, production equipment and facilities, and other supplies and 

services essential to the national defense; the growth requirements of domestic industries to meet 

national defense re.quirements and the supplies and services, including the investment, 

exploration and development necessary to assure such growth; the impact of foreign competition 

on the economic welfare of individua l domestic industries; and any substantial unemployment, 

decrease in revenues of govemment, loss of skills or investment, or other serious effects resulting 

from the displacement of domestic products by excessive imports, without excluding other 

factors, in detem1ining whether such weakening of our intemal economy may impair the national 

security. In January 2018, I delivered two reports to the President on the effects of imports of 

steel and aluminum on the national security. The Commerce Depa1tment reconunended that 

President Trump take action to protect the long-tenn viability of our nation's steel and aluminum 

industries. 

We concluded that steel import levels and global excess capacity are weakening our domestic 

economy and tberefore threatens to impair our national security. The level of foreign steel 

imports threatens to inlpair the national security by displacing domestic production. Six basic 

oxygen furnaces and four electric arc furnaces have closed since 2000 and employment bas 

dropped 35 percent since 1998. Global excess capacity will cause U.S. producers to face more 
10 


33808A.003

and more competition from foreig» imports as other countries increase their exports to further 

their own economic objectives. China is by far the largest producer and exporter of sted, and the 

largest source of excess steel capacity. China's excess capacity alone exceeds the total U.S. 

steel-making capacity by at least three times. 

We also concluded that the quantities and circumstances of aluminum imports are weakening our 

economy and threaten to impair national security. Rising levels of foreign imports put domestic 

produc-ers at risk of losing the capacity to produce aluminum needed to support critical 

infrastructure and national defense. Aluminum imports have risen to 90 percent of total 

domestic demand for primary aluminum, up from 66 percent in 2012. From2013-2016, 

aluminum industry employment fell by 58 percent, six smelters shut down, and only two of the 

remaining five smelters are operating at capacity, even though demand has grown considerably. 

The report found that excess production and capacity, particularly in China, has been a major 

factor in the decline of domestic aluminum production. We concluded that if no action were 

taken, the United States could be in danger of losing the capability to smelt primary aluminum 

altogether. 

The tariffs on steel and aluminum are anticipated to reduce imports to levels needed for these 

industries, in combination with good management, to achieve long-term viability. As a result, 

these industries will be able to re-open closed mills, sustain a skilled workforce, invest in needed 

research and development, and maintain or increase production. The strengthening of our 

domestic steel and aluminum industries will reduce our reliance on foreign producers. 
11 


33808A.004

It is true that higher steel and aluminum costs could mean price increases for American 

consumers. However, any increases should be small for individuals and famil ies. According to 

Commerce Department estimates, monthly payments for a typical mass-market automobile may 

increase by $4 because of the tariffs. We believe that is a fair price to pay for protecting national 

security. 

The United States is not the only country that has expressed concem about the types of unfair 

trade practices and excess capacity that are prevalent in the steel and aluminum industries. 

Countries like China have provided massive subsidies to their companies and this is harming 

markets worldwide. As described in the Presidential proclamations announcing these actions, 

the President welcomes any country with which we have a security relationship to discuss 

altemate ways to address the threatened in1pairment of the national security caused by imports 

from that country. The President has left open an avenue for potentially modifying or removing 

a tariff under certain conditions for individual countries. 

In addition, the President authorized the establishment of a mechanism for U.S. parties to apply 

for exclusions of specific products based on demand that is unmet by domestic production or for 

specific national security considerations. This process is being managed by the Commerce 

Department in consultation with other Federal agencies. We published an interin1 fmal rule in 

the Fell era/ Register on March 19 establishing the procedures for the exclusion process. 

Only individuals or organizations using steel and aluminum articles subject to the tariffs in 

business activities (e.g., construction, manufacturing, or supplying steel or aluminum to users) in 
12 

f 


33808A.005

the United States rnay submit exclusion requests. This limitation recognizes the close relation of 

the economic welfare of the nation to our national security, by affording those who contribute to 

that ec-onomic welfare through business activities in the United States, the opportunity to submit 

exclusion requests based on particular economic and national security considerations. Allowing 

individuals or organizations not engaged in business activities in the United States to seek 

exclusion requests could undennine the adjustment of imports that the President detennined was 

necessary to address the threat to national security posed by such imports. Any individual or 

organization in the United States may file objections to steel and aluminum exclusion requests, 

but the Commerce Department will only consider information directly related to the submitted 

exclusion request that is the subject of the objection. The review period for exclusion requests 

will normally not exceed 90 days. 

The Commerce Department wiU also c-ootinue to monitor imports of steel and aluminum in 

accordance with the President's March 8 proclamations. 

We will not hesitate to continue standing up for American families, American businesses, and 

American workers. 

Thank you for aUowing me to testifY on this vital national security matter and I look forward to 

answering questions from members of the committee 
13 

Chairman BRADY. Thank you, Mr. Secretary, for your testimony. We will now proceed to questions. Due to the time constraints this morning, we have agreed to limit questions to 3 minutes. And I will begin. 

Mr. Secretary, we have to get the exclusion process right for both 

products and countries. So we make sure our remedies are narrowly tailored and U.S. jobs aren’t harmed. If these exclusions 

aren’t provided in a workable and timely way, this could cost us 

U.S. jobs. 

So, in my district, there is a big impact on energy. And just one 

example, Grant Prideco is this great manufacturing success in my 

district in Navasota, Texas, population 7,500. They make premium 

drill pipe that is used in some of the most technically demanding 

oil field applications in the world. 

They send steel briquettes from Corpus Christi, Texas to Austria, 

which creates green tubes that meet exacting technical specifications that aren’t available here from U.S. suppliers. Those steel 

tubes come back to Navasota, and those 500 workers thread them 

and improve them. They sell them, about 60 percent of them, to 

American energy companies so they can compete. And 40 percent 

they compete with and sell around the world. They have fierce 

global competition. 

So Grant Prideco was planning to increase their workforce from 

500 to 1,000 employees, as the energy market improves. But now 

those plans are on hold, due to these tariffs and the exclusion process. Worse, because they could, under a 25 percent tariff, lose half 

of their sales and potentially face shrinking that workforce. 

So I did a town hall recently in their manufacturing plant. These 

are great workers who do an amazing job, and this plant is so important to that community. So if that—their product isn’t excluded, 

what do I tell them? Do I—— 

Secretary ROSS. Well—— 

Chairman BRADY. Well, just a second. Do I tell them China is 

cheating, so you need to lose your job? That just doesn’t seem right. 

I know you care about these manufacturing jobs. I know President Trump is just passionate about protecting those jobs. So will 

the exclusion process protect American workers like that? 

Secretary ROSS. I believe so. And, as you know, we have posted 

the basis for product exclusions on the Commerce website. We did 

that the other day, and we have already gotten in 100 or 200 inquiries, and are literally processing them as we sit here this morning. 

As to eligibility, any individual or organization that uses steel or 

aluminum products identified in the proclamations may submit requests for exclusion. Those parties must use the steel or aluminum 

articles in business activities in the United States, as was the case 

with the parties you identified in your opening remarks. And those 

could be construction, they could be manufacturing, or they could 

be supplying those products to end users. 

A foreign-owned entity with a facility here with U.S. employees 

is also eligible to petition for an exclusion. A 90-day intergovernmental review period will encompass the 30-day comment period. 

And we hope not to take 90 days for the intergovernmental review. 

14 

The way that the mechanics will work is there is a 30-day comment period followed by 15 days for agencies to have—to go 

through the interagency process and comment, and then up to 45 

days for Commerce to analyze and make a final determination. So 

we anticipate no more than 90 days, and hopefully a good deal less. 

If a product is excluded, the exclusion request will be made case 

by case, based on the information specific to the individual or organization. It may include a single or multiple foreign source. However, a total volume of imports will be authorized for a specific time 

period. We do have the discretion to make broader exclusions available to all importers of those particular products if we find the circumstances warrant it. 

We will be looking for a—in order to not grant an exclusion, we 

will be looking for demonstrated manufacturing capability meeting 

the technical parameters for the specific article in question. This 

could include idle capacity that is being brought back online as a 

committed thing—not as a prospect, not as a possibility, but as a 

commitment by the U.S. company, as well as we will include new 

expanded capabilities. 

The determination as to whether to accept or deny an exclusion 

will be made public, and on a rolling basis. There will also be a 

process for companies to file confidential information that will not 

be made public. There will be an appeal process if a company is 

denied an exclusion. 

So that is a brief summary of the basic terms of the product exclusion process. Yesterday you had Ambassador Lighthizer here. I 

believe that he gave you a real description as to how he visualizes 

the country exclusion process to be done. We also are playing a 

supportive role in that, so I could address that if you wanted. 

Chairman BRADY. Thank you. Mr. Secretary, you have the discretion, if a product is excluded, to make those tariffs retroactive 

so there is not a harm on those U.S. companies. Will you consider 

that as part of the process? 

Secretary ROSS. Yes, sir. We have actually made a formal request to the Customs and Border Protection that they do what we 

call an escrow account. 

Chairman BRADY. Yes. 

Secretary ROSS. This is quite commonplace between us and the 

Customs and Border Protection in the context of anti-dumping and 

countervailing duties. So, while the volume here might be a little 

more, that is a process with which they are familiar. We think it 

is only fair, because it shouldn’t be that, just because there is a 90- 

day process, any manufacturer who is granted relief should not be 

stuck for the tariff during that 90 days. 

Chairman BRADY. And I agree, Mr. Secretary. Thank you. 

Mr. Neal. 

Mr. NEAL. Thank you, Mr. Chairman. 

Mr. Secretary, details as to how the tariffs and exemptions for 

countries and exclusions for company-specific products and how 

they are to be determined is really going to be critical. 

Diversified Metals, as a Department of Defense supplier with a 

facility located in my constituency, has raised concerns about the 

impact of these tariffs on its business. Diversified Metals provides 

key alloys used by the U.S. Navy in its submarine program. The 

15 

Navy has only approved one hot-rolled bar mill, which currently is 

located in England. 

It is important for you to know that there is currently a good 

deal of uncertainty and confusion as to how the tariffs will affect 

the Department of Defense contracts. Companies are concerned 

that they will be required to pay tariffs, even if the Department of 

Defense mandates that they source their steel or aluminum from 

a foreign facility. 

Now, this is where I think that there is an opportunity for more 

clarification, and it relates to multilateral strategy. How will the 

announced tariffs, after exclusions and exemptions, ultimately provide relief to U.S. workers and industries? And I think I am picking up on a point the Chairman made on that. 

And what is the Administration’s vision for achieving a multilateral, coordinated strategy for counteracting the global over-capacity 

crisis that has harmed the steel and aluminum industries? 

Secretary ROSS. Well, those are several questions. I will try to 

respond to the ones that I can recall. And if my memory is faulty, 

perhaps you can remind me. 

As you have seen, the UK—and, for that matter, the whole EU— 

I believe you have seen the release that Commissioner Malmstrom 

from the European Commission and I put out jointly yesterday. We 

have had very constructive discussions not just on steel and aluminum, but on potentially a broader range of topics. And our hope 

is that, just as we are in the midst of negotiation with Canada and 

Mexico on steel and aluminum and on other topics, our hope is 

that, for the first time, this will bring collective action on the part 

of the world community to deal with the ultimate problem, which 

is the over-capacity, particularly in China, but not exclusively in 

China. 

So, we are hoping that there will be extensive negotiations, bilateral or multilateral, as a result of this. 

Mr. NEAL. Mr. Chairman, I just would emphasize as you close, 

the multilateral aspect of this is really going to be critical. Thank 

you. Thanks, Mr. Chairman. 

Chairman BRADY. Thank you, Mr. Neal. 

Mr. Johnson, you are recognized. 

Mr. JOHNSON. Thank you, Mr. Chairman. 

Secretary Ross, welcome. 

Secretary ROSS. Thank you, sir. 

Mr. JOHNSON. Let me begin by saying that I strongly oppose 

the tariffs on steel and aluminum imports. You know my home 

State of Texas leads all States when it comes to importing steel 

and aluminum products. So it is a big deal for Texas. 

As a combat veteran who fought in two wars, I am deeply troubled that section 232, which is intended to protect our national security, is being misused to advance a protectionist agenda. 

Mr. Secretary, there is simply nothing to suggest that the imports pose a risk to our national security. Instead, these tariffs pose 

a serious risk to our economy, they could trigger a trade war, and 

they may damage our relations with key allies. 

In the Department of Defense memo that Secretary Mattis sent 

to you, he said—and I quote—‘‘DoD does not believe that the findings in the reports impact the ability of DoD programs to acquire 

16 

steel or aluminum necessary to meet national defense requirements.’’ 

Mr. Chairman, I would like to submit that memo for the record. 

Chairman BRADY. Without objection. 

[The submission for the Record of Hon. Sam Johnson follows:] 

17 


33808A.006

• 

SECRETARY OF DEFE;NSE 

I 000 DEFENSE PENTAGON 

WASHINGTON. DC 20301· 1000 

MEMORANDUM FOR SECRETARY OF COMMERCE 

SUBJECT: Response to Steel and Aluminum Policy Recommendations· 

This memo·provides a consolidated position from the DoD on the investigation of the 

effect of steel mill imports and the effecls of ixnporls of aluminum on national security, 

conducted by the DepartmeJJ1 of Commerce. under Section 232 of the T!llde Expansion Act of 

1962 (hereinafter "Section 232 Report"). 

Regarding the December 15,2017 reports on steel and aluminum, DoD believes that 

the Systematic use of unfair trade practices to iJJ1entionally erode our innovation and 

manufacturing industrial base poses a risk to our national security. As sucb, DoD concurs with 

the Department of Commerce's conclusion that imports offorcign Sleel ana aluminum based 

on unfair trading practices impair the national security. As noted in both Section 232 reports, 

however, the U.S. military requirements for steel and aluminum each only represent about 

three percent of U.S. production. Therefore, DoD does not believe that the findings in tlte 

reports impact the ability ofDoD· progriUliS to acquire the steel·or aluminum necessary to meet national defense !'!9uitemeuts.__ _ __ 

DoD continues to be concerned about ~e negative impact on our key allies regarding 

the recommended options within the reports. Hov.oever, DoD recognizes that among these 

reports' altetnatives, targeted tariffs are f110re preferable than a global quota or global tarif£ fn 

addition, we recommend an inter-agency group further refine the targeted tariffs, so as to create 

incentives fur trade partners to work with the U.S. O!l addressing the underlying issue of 

Chioese transship.ment. 

If the Administration moves forward with targeted tariffs or quotas on steel; .DoD 

recommends that the management and labor leaders of the respective industries be convened 

by the President, so that they rnay w1derstand that tl1ese tariffs and quotas are conditional. 

Moreover, if the Administration takes action on stee~ DoD recommends waiting before laking 

further steps on aluminum. The prospect of trade action9n aluminum may be sufficient to 

ccel'ce improved behavior of bad actors. h1 either case, it remains important for,the President 

to continue to communicate the negntlvc consequences of unfair trade pra.ctices. 

This is an opportunity to set clear expectations domesticaJiy regarding competitiveness 

and rebuild economic strength at home while preserving a fair and reciprocal international 

economic system as outlined in the National Security Str'.ttegy. It is critical that we reinforce to 
18 

f 


33808A.007

our key allies that these actions are focused on correcting Chinese overproduction and 

countering their attempts to circumvent existing antidumping tariffs-not 1he bilateral U.S. 

relationship. 

cc: 

Secretacy of the Treasury 

Secrctacy of State 

Chief of Staff to the President 

Assistant to the President for National Security Affairs 

Cbainnllll, National Economic Council 

United States Trade Representative 

2 
19 

Mr. JOHNSON. Thank you. 

Mr. Secretary, in light of this statement from the Secretary of 

Defense, why did you and the Administration ignore the view of 

Secretary Mattis and still go ahead with the tariffs? 

Secretary ROSS. Thank you, sir. The letter has many more 

words than were described in the brief excerpt you made from it. 

Let me read the part of it that is in the second paragraph: ‘‘Regarding the December 15, 2017, reports on steel and aluminum, Department of Defense believes that the systematic effect of unfair trade 

practices to intentionally erode our innovation and manufacturing 

industrial base poses a risk to our national security. As such, DoD 

concurs with the Department of Commerce’s conclusion that imports of foreign steel and aluminum based on unfair trading practices impair the national security.’’ 

Then he goes on to say about the immediate request that—the 

difference in the paragraph you read and the paragraph I read is 

simply this: The threshold under section 232 is whether or not the 

imports threaten the national security. The threshold is not that it 

actually impinges right now on national security, sir. And that is 

why the Department of Defense specifically said it concurred with 

our conclusion. 

Chairman BRADY. The time has expired. Thank you, Mr. Johnson. 

Mr. Levin, you are recognized. 

Mr. LEVIN. Welcome, Mr. Secretary. Welcome. I want to review 

quickly what seems clear. There has been a steel glut, also aluminum. China, the main source of it. China has used steel and aluminum as an export platform. State-owned enterprises, subsidization, has been the failure of action in this country and abroad. 

As far as I know, there has not been a single hearing since the 

Republicans took over on steel. We wrote letters urging action and 

the Administration in the past also settled for talk. 

Anti-dumping and countervailing duty—I went to Geneva to save 

them years ago. They were saved, but they are not enough. 

So the main victim has been the United States, our companies, 

our workers. And there has been an impact—potentially, at least— 

on national security. 

So I want to press you. What, in view of these clear facts, including inaction by so many of our colleagues on the Republican side, 

what is the strategy? What is the main objective? Is it the tariffs, 

or is it the tariffs to force global action? 

I assume it isn’t NAFTA. As we have discussed, you have to step 

up to the plate on NAFTA, and they are allowing Mexico to use 

suppressed wages as a weapon to attract industry. 

So briefly, with all these exceptions, is it a global response that 

is your aim, essentially? 

Secretary ROSS. It is, indeed. The reason that we need to take 

this kind of action is several. As you may be aware, in the normal 

course of events, the Commerce Department imposes anti-dumping 

and countervailing duty actions on a variety of products from a variety of countries. We, in fact, have 424 such orders outstanding 

right now, half of which, 212, relate to steel. And of the 87 pending 

investigations, 38 also refer to steel. A lot of the steel actions have 

been directly against China. 

20 

And the end result of that is not quite what you might have expected. Our direct imports from China have gone way down. They 

are a fraction of what they were before all of these actions were 

put in. But it is a little bit of a whack-a-mole situation in that it 

suddenly appears from another country, with or without some further transformation. And it appears, either directly, or it appears 

because their over-production dislodges domestic production from 

its own domestic market, and that material is dumped independently by the other country into world markets. 

Chairman BRADY. Mr.—— 

Mr. LEVIN. So it is a global response that you are after? 

Secretary ROSS. Yes, it is. Yes, it is. 

Mr. LEVIN. Thank you. 

Chairman BRADY. Thank you. Mr. Levin, time has expired. 

Mr. Reichert, you are recognized. 

Mr. REICHERT. Thank you, Mr. Chairman. 

I thank you for being here, Mr. Secretary. I appreciate you taking time to be with us today. I also appreciate the fact that you 

have in your statement mentioned that you have considered the 

undue negative effects downstream. But I know you are hearing 

and I am hearing that businesses continue to be worried about the 

negative impact of these tariffs on their bottom line, and the timing 

and complexity of the exclusion process. 

And there is another issue, too. In sharing information as they 

apply for the exclusions, they are concerned about proprietary information that they are going to be sharing on their applications 

that are too sensitive to share publicly. 

Consumers are also worried, as you know. Families are worried, 

who buy everyday goods and—that require steel and aluminum, because they are anticipating that costs are going to go up. 

So there are a lot of issues I know that you are considering. 

These tariffs also set up the potential for retaliation by our trading partners. And while I am especially concerned about Washington State, I am concerned about the entire country. While I 

agree that we must combat unfair trade practices, we need to take 

a targeted approach and work in a partnership with the global 

community on a solution. 

And I want to touch on the question that Mr. Neal touched on 

and give you the last minute and 30 seconds to hopefully go into 

more detail. How does the Administration plan to strengthen that 

relationship with countries now who are going to be imposed with 

these tariffs that are not real pleased about this process to create 

a coalition that is working together to address the—really, the big 

problem is the tariffs or—China over steel and aluminum. 

So what is your plan, globally? 

Secretary ROSS. Well, first, on the confidentiality question, we 

do have our normal process. Any company that wishes to submit 

proprietary information, it will be treated as such and will not be 

disclosed publicly. So that is a normal thing in AD and CVD that 

will apply equally here. 

Second, as I believe Ambassador Lighthizer probably alluded to 

yesterday, part of the discussion that we will be having with countries for their exclusion is the very topic what will they do to be 

cooperating with us against the global overcapacity problem. 

21 

The problem is enormously severe. I will give you two data 

points. China’s excess capacity exceeds our total capacity. China 

produces in 1 month about as much steel as we produce in a year. 

So it is way, way out of proportion, when you consider that they 

are the second-largest economy, but vastly the dominant producer 

of steel in the entire world. 

Chairman BRADY. Mr. Secretary—— 

Secretary ROSS. So it is a global problem, and it is also illustrated as a global problem by the fact that, of our steel orders, they 

are not all against China. They are against 34 different countries. 

So it is—— 

Chairman BRADY. Mr. Secretary, I apologize. The 3 minutes 

goes so fast and we have so many Members who want to question. 

Secretary ROSS. Sorry. 

Chairman BRADY. Thank you. 

Mr. Doggett, you are recognized. 

Mr. DOGGETT. Thank you very much, Mr. Secretary. If I understand correctly, you presented President Trump with three alternatives to implement this policy on aluminum. One of them was 

global, one of them was targeted. Is that correct? 

Secretary ROSS. Yes, that is. 

Mr. DOGGETT. Okay—— 

Secretary ROSS. The targeted one encompassed just China, 

Hong Kong, Russia, Venezuela, and Vietnam. 

Mr. DOGGETT. Right. And if that alternative had been adopted, 

Russia, for example, would be paying three times as much tariff as 

it will under the approach that was accepted. 

Secretary ROSS. Yes. The targeted approach, had it been adopted in its original form—— 

Mr. DOGGETT. And that is—— 

Secretary ROSS [continuing]. Would have put very high tariffs 

on a very—— 

Mr. DOGGETT. Although five countries—— 

Secretary ROSS [continuing]. Small number of countries. 

Mr. DOGGETT. And that really goes to a broader concern that 

I have. That would have permitted other countries, our allies, to 

maintain the quota of aluminum that they had last year. 

Secretary ROSS. Yes, sir. 

Mr. DOGGETT. Instead, President Trump rejected that alternative that would have imposed higher tariffs on Russia and these 

other four countries. Russia, of course, has the second-largest aluminum producer in the world. That is headed by someone who has 

repeatedly been denied visas to come to the United States because 

of his connections to criminal organizations. 

And I just have to, frankly and respectfully, question your comment that the President made clear that his first priority is to keep 

America safe. I don’t see anything indicating that he is particularly 

interested in keeping our country safe from Russia. Indeed, I have 

to concur with the comments that I am sure you are familiar with 

that Barry McCaffrey, a decorated four-star United States Army 

General, combat veteran from Vietnam, recipient of three Purple 

Hearts, said within the last few days: ‘‘Reluctantly, I have concluded that President Trump is a serious threat to U.S. national 

security. He is refusing to protect vital U.S. interests from active 

22 

Russia attacks. It is apparent that he is, for some unknown reason, 

under the sway of Mr. Putin.’’ 

Now, I know you don’t agree with that, but we have had—since 

he made that very powerful statement from someone who is clearly 

an American patriot, we have had President Trump respond to the 

attempted murder in Great Britain and to the continued Russian 

assault on our election system by calling and congratulating President Putin. He has insulted people all over this country, but the 

one person he has never a bad word about, a questionable word 

about, is Vladimir Putin. 

And it appears that Mr. McCaffrey, General McCaffrey, has 

summed it up rather well, and that, if anything, the approach 

taken with these aluminum and steel tariffs is very consistent with 

the approach of always coddling Russia and never calling it out for 

its attempt to steal our democracy. 

Chairman BRADY. Thank you. The gentleman’s time has expired. 

Mr. Roskam, you are recognized. 

Mr. ROSKAM. Thank you, Secretary Ross. Getting back to the 

232 process, it is my understanding that the product exclusion request only allows an exclusion for one product at a time, even if 

the only difference in that product is size, such as the different diameters of steel wire. 

I represent suburban Chicago, and we have a lot of small manufacturers. And they will have—you know, one company, as you 

know, will have hundreds and hundreds of products. How do you 

contemplate that? That seems foolish, as it is presented now. I 

would assume that there is more to this story, and that you are not 

requiring a company to submit hundreds of petitions. 

Similarly, maybe you could also answer this. Surely there is a 

way for industry groups to join together, you know, just in terms 

of expediting this. Could you speak to that? 

Secretary ROSS. Right. Well, first of all, we can grant blanket 

requests, in that if it is pretty obvious from the request that we 

have received that a particular item is generally regarded as being 

unavailable, we can grant blanket requests. 

Now, that won’t be the rule, but there will be situations where 

we will. And we could do that based on the submission of an individual company. So in the normal course, we think that a lot of the 

requests will be extremely specific products that are peculiar to a 

particular end use, and maybe one or two companies needing the 

material. Ones that have broader impact we do have the ability to 

deal with in a broader way. 

But we need specificity, because in order to tell Customs and 

Border Protection how to implement, we need the Harmonized 

Code number of the individual product. That is the only way that 

they can track it. So while I would have preferred a somewhat less 

bureaucratic system, it is not an alternative that we really have. 

It is the only mechanical way that we can implement. 

Mr. ROSKAM. I think that is something to take in. I mean, the 

burden locally will be enormous if that is not spoken to and remedied in some way. I am sure that is not lost on you, but there 

were ashen-faced looks around the room recently at a company that 

23 

I was visiting not long ago when they were thinking about this 

process. And it just seemed completely overwhelming. 

I have made my point; I yield back. 

Secretary ROSS. Well, it is the best we could do, sir. 

Chairman BRADY. Thank you. To balance this out, we are going 

to go to two-to-one questioning. 

Mr. Buchanan, you are recognized. 

Mr. BUCHANAN. Thank you, Mr. Chairman, and thank you, Mr. 

Ross, for being here today. And thank you for your leadership. 

Let me ask you, talking about other topics, Florida, it is about a $12 billion industry in terms of the economic impacts—fruits and 

vegetables. I talked to a grower yesterday. You know, in the last 

2 years—I know we put an agreement in place on anti-dumping. 

I think we are looking at another one. It has impacted us, our business. The industry is down 22 percent. Yes, we are down 22 percent, Mexico is up 14. That’s a 34-point spread. It has a huge impact, I will tell you, on jobs and a lot of businesses throughout Florida. Fruits and vegetables, but I am—in terms of tomatoes in my 

region, it is one of the largest—we are one of the largest growers 

in that. And many of them are going to have to close up—or that 

is what they claim, anyway. 

I was interested in your thoughts about what we are doing on 

anti-dumping. I know we are talking about steel and aluminum, 

my colleagues, but I am interested in this aspect of it while we 

have you here today. And I will mention we have the same growing 

season as Mexico, so we are very concerned as we work through 

this NAFTA deal. 

Secretary ROSS. Right. Well, as you know, before moving to 

Washington, I was a Florida resident, and I met extensively with 

the tomato growers and other growers there. 

And it was partly at my suggestion that we included in the 

NAFTA talks the question about seasonality of measurement, as 

opposed to just annual measurement of the import situation of 

those products. I don’t know that that has been resolved yet in the 

NAFTA discussions, but we are keenly aware of the problem of 

seasonality, and the potential that that has to lead to very, very 

disruptive end results for the growers. So we are focusing on it. 

Mr. BUCHANAN. Are you working on an additional anti-dumping requirement or something? Do you know where that might be? 

I know something got put in place a couple of years ago, but people 

are concerned what was put in place is not working. And under the 

current negotiation, is that something that is being considered? 

Secretary ROSS. Yes, at the request of the growers in the States, 

particularly the Florida growers, we have initiated a reset of discussions of the present arrangement with the Mexicans. 

Mr. BUCHANAN. Thank you, I yield back. 

Secretary ROSS. And that is underway as we sit here. 

Mr. BUCHANAN. Thank you. 

Chairman BRADY. Thank you. 

Mr. Kind, you are recognized. 

Mr. KIND. Thank you, Mr. Chairman. 

Mr. Secretary, thanks for being here with us today. I am sure we 

are going to learn more—I am over here. 

Secretary ROSS. Oh, sorry. 

24 

Mr. KIND. I am sure we are going to learn more about the Administration’s 301 decision against China later today, when you 

make that announcement. And there is no question China has not 

been a good actor in many of the rules of trade. 

My problem, however, has been the unilateral approach. I am not 

convinced that China, when they are mis-practicing trade and not 

abiding by the rules, is only doing that to discriminate against U.S. 

interests or U.S. companies. This is on a global basis. And there 

is an opportunity for you, this Administration, to work with us to 

try to build a multilateral coalition to isolate China, which I think 

would have a more meaningful impact, from China’s perspective, 

rather than just this Administration, this country taking action. So 

I encourage you to explore that with us and work with us in order 

to do that. 

But back to the 232 national security decision on steel and aluminum, you know, many of us have been concerned about the 

whole process from the beginning, that it was ill-considered, chaotic, confusing, the classic case of shoot, fire, aim. Now we are trying to backfill exemptions for products and for countries that are 

still ill-defined and confusing. 

The one thing businesses in America hate most is uncertainty. 

Many of them are complaining that the process is going to be very 

narrow and tedious. Our friends and allies that this may apply to 

are scratching their heads, wondering why they potentially could 

be singled out. 

And, again, it is the unilateral basis that this Administration has 

decided to pursue with trade policy that is very troubling. We do 

need friends and allies around the globe. We need to be a leader 

in developing a rules-based global trading system. Leading, rather 

than following or isolating, as the case may be. 

As an example, on 232 and the national security reason, I and 

Representative Mike Coffman sent you, along with 44 other bipartisan Members of Congress, a letter last year talking about certain 

aluminum that has absolutely no national security application to 

be exempted. The rolled can sheet, the primary aluminum, I even 

had a conversation with you following up with a letter, and I feel 

we didn’t get an adequate response, even though it is currently on 

the list. 

And if this is the type of feedback or the type of partnership that 

we are going to get from the Administration, coming to us asking 

for a 3-year extension on TPA is going to be a pretty heavy lift because of the lack of responsiveness. 

And if we are going to go down this road of invoking 232 for national security implications, especially with products that have absolutely no application, what is to prevent other countries from invoking their own national security reasons to exclude our exports? 

I mean, I have heard arguments from Europe all the time to justify trade barriers to our agriculture products because of the food 

security system that they were trying to protect. And this is an 

area of the world that knew massive starvation during two world 

wars. So that is problematic, that other nations now will see a door 

open to them to invoke national security to erect protectionist 

measures. And it is something many of us are deeply concerned 

about. 

25 

Secretary ROSS. Well, I—— 

Chairman BRADY. Thank you. 

Mr. Secretary, I apologize. Time is expired. 

Mr. Smith, you are recognized. 

Mr. SMITH OF NEBRASKA. Thank you, Mr. Chairman. 

Thank you, Mr. Secretary, for being here. I represent the number-one agriculture district in the Nation, so it certainly stands to 

reason that I would share the concerns of my constituents on the 

tariffs, and the various impacts that may take place. 

As you know, Secretary Perdue has said—or he mentioned that 

agriculture and ag products are always the tip of the spear in any 

type of retaliatory action. And I—let me just suggest that our agriculture economy is certainly not in a position to absorb any spears 

at this point, given the sensitive nature of and kind of the downturn in the ag economy that has been in place for longer than we 

would prefer, certainly. 

Can you reflect a bit on assurances you can give us that the Administration has considered rural communities, rural economies, 

and their—and our interests in considering what impact the tariff 

moves might have? 

Secretary ROSS. Well, as you know, I work very, very closely 

with Secretary Perdue, and worked very hard on getting the beef 

exports going again to China, worked very hard on trying to open 

up some of those markets in South America, and worked hard to 

deal with the sugar problem from Mexico. So it is not that there 

is any lack of focus on trying to help agriculture. 

I will also mention, in the context of the question of your colleague from Florida, the work that we have done trying to work on 

the seasonal, as opposed to annual, measurement of agricultural 

imports. 

We have also put a lot of pressure on about sanitary and 

phytosanitary non-science-based constraints that other countries 

put on our products. 

So it really wouldn’t be fair to say that the Administration has 

neglected agriculture. Agriculture has been a very important part 

of our activity—— 

Mr. SMITH OF NEBRASKA. Sure, and I would reflect—I mean, 

I would agree that the Administration, I think, has worked hard 

for agriculture. I am wondering if there is any sort of analysis that 

exists that could point to that recent action or actions to come 

which will not actually harm or set us back on some of the advances we have made more recently? 

Secretary ROSS. Right. Well, in terms of retaliation, there is no 

way to forecast exactly what a given party would do. But what I 

would say is—the rest of the world cannot feed itself. We have— 

we all know that. They really need imports from those countries 

like the United States that are very good at agriculture. 

What that means, if a country tried to impose restrictions on a 

particular crop from the United States, it probably would raise 

their own cost, because there isn’t a country in the world who pays 

us one penny more for any of our produce than the lowest price 

that it could get from somewhere else. Nobody does us a favor. 

Chairman BRADY. Thank you. The time has expired. 

Mr. SMITH OF NEBRASKA. Thank you. 

26 

Chairman BRADY. Ms. Jenkins, you are recognized. 

Ms. JENKINS. Thank you, Mr. Chairman, and thank you, Mr. 

Secretary, for being here this morning. 

Last spring, in a similar hearing to this one, I voiced my concern 

to Ambassador Lighthizer about using national security as a basis 

for trade restrictions, since this action could lead to retaliation if 

another nation follows suit and restricts its imports of U.S. products, like sorghum and soybeans, using the same rationale. 

While it is a good step to implement an exemption process that 

many Members here requested for our allies and trading partners 

following the proposed steel and aluminum tariffs, my concerns 

have only grown, especially since other nations are indeed preparing a retaliation list targeting farm products. 

Secretary ROSS. Right. 

Ms. JENKINS. Now, Mr. Secretary, you have made comments recently about farm families and ranchers who—I quote—‘‘scream 

and yell when their nerves get rattled by the Administration,’’ and 

you mentioned that they even go so far as to write to their Member 

of Congress. You may not be aware, however, that the State of 

Kansas just last week declared a statewide drought emergency for 

all 105 counties, or that blizzards roll through at a moment’s notice, or that we have had multiple years of large wildfires, some 

which have blazed an area many times larger than the entire District of Columbia. 

Kansans depend on selling their products abroad. The value of all Kansas ag exports total $3.7 billion, even with a State with a 

population of fewer than 3 million Kansans. Ag represents 7 of the 

top 10 exported products from our State. This includes wheat, 

which is one of the second-most valuable international exports from 

Kansas, trailing only our plane manufacturing. And prior to 

NAFTA, Mexico imported an average of 11.5 million bushels of 

wheat from the United States. After NAFTA, we have seen a nearly tenfold increase to 110 million bushels. 

And on the national scale, half of the wheat grown in the United 

States is exported, so half of growers’ market is foreign consumers. 

So my constituents’ livelihoods depend on both Mother Nature 

and foreign markets. So I am just curious. Why do you think American farmers and the ag industry are so nervous when it comes to 

NAFTA or sudden tariffs? And do you know how many American 

agriculture heartland—how much they depend on these exports? 

Secretary ROSS. I will answer very briefly. First of all, there is 

no sign that any of these other countries have practiced restraint 

before we invoke national security. They are doing what they wish 

to do. Every other country that I am aware of is much more highly 

protectionist than the United States. They all talk free trade, and 

they all practice very protectionist activities. 

Chairman BRADY. Mr. Secretary, the—I am sorry. Again, the 3 

minutes goes quickly. The time is expired. 

Mr. Pascrell. 

Mr. PASCRELL. Thanks for coming today, Mr. Secretary. When 

you look at any chart of how close we are linked with China, it becomes quite obvious. The G20 countries, they—with China as the 

top five export destination, this is something we can’t ignore. When 

you look at the relationship between the—our S&P 500 and the 

27 

Shanghai Stock Exchange composite, they are not going to get rid 

of us and we are not going to get rid of them. 

We know that the central problem here, in many countries besides China, is subsidizing their production. 

Secretary ROSS. Right. 

Mr. PASCRELL. No question about it. And we have to zero in 

on that. I think you would agree with that. 

Secretary ROSS. Yes, I do. 

Mr. PASCRELL. The over-capacity and the flood of cheap imports from countries sometimes like China needs to be addressed 

very, very closely. 

I and many Democrats in Congress have a strong record on calling out China for their trade cheating. It is on the record. And we 

have passed bills to hold them accountable on currency and on 

steel dumping. Republicans have not done much of anything up to 

now to confront this issue. In fact, what we have done is paid corporations and subsidized the corporations to get out of the country. 

It is written in our budgets. That is unacceptable. 

They, the Republicans, passed a tax bill that promotes off-shoring. So we are talking out of both sides of our mouths here. We 

want to defend the American worker, and at the same time we are 

making it easier for companies and corporations to move. I don’t 

think that this works at all. 

I strongly support enforcement of U.S. trade laws. There has 

been a lot of discussion about how the 232 steel and aluminum tariffs that the President imposed may start a trade war. No one wins 

a trade war. But I know one thing. Under article 1, section 8, this 

Congress and the very people in this room should have the most 

to say about what direction we go in in trade. It is very, very clear. 

Can you please explain whether these tariffs could trigger a 

trade war, as you perceive it? 

Secretary ROSS. Well, as I indicated before, there is no indication that the other countries have practiced any restraint before we 

did the action that we are about to take. Whether they will respond 

and, if they do, in what form, no one really knows. But I don’t 

think that, whether we call it national security or something else, 

is going to have any impact whatsoever on the nature of their response. They are going to respond in whatever they think will be 

the most politically hurtful way to us. 

Mr. PASCRELL. Thank you, Mr. Secretary, for your forthrightness. 

Thank you, Mr. Chairman. 

Chairman BRADY. Thank you, Mr. Pascrell. 

Mr. Paulsen, you are recognized. 

Mr. PAULSEN. Mr. Chairman, just to follow up on my colleague, 

Sam Johnson, when he had his interaction with you, if you read 

further on the memo—the Secretary of Defense—it is very clear 

that the Department of Defense is concerned about the approach 

that is being taken here. It says, ‘‘Therefore, DoD does not believe 

that the findings in the reports impact the ability of DoD programs 

to acquire the steel or aluminum necessary to meet national defense requirements. DoD continues to be concerned about the negative impact on our key allies regarding the recommended options 

within the reports.’’ 

28 

But let me go this way, Mr. Chairman and Mr. Secretary. Look, 

I don’t believe this is the right approach to implement these tariffs. 

I can’t stress enough, though, the importance of making sure we 

are limiting the impact of these tariffs on metal-consuming companies and their workers who, you know, in the end could be very 

less competitive globally by higher prices. And having an exclusion 

process that is fair, and grandfathering in existing contracts, is 

critical. 

I am hearing from small manufacturers in my State of Minnesota. I have Harvey Vogel Manufacturing Company. They are located in Minnesota. They specialize in metal stamping and fabrication. And they say they are already seeing pretty big price increases from their suppliers because of the threats of these tariffs 

coming into place. 

And they also say their customers now are worried about what 

the future holds. And for them, they are a company that says the 

tariffs are now even probably the top trade issue, aside from the 

uncertainty that they have had around NAFTA. We are a border 

State and we have a lot of trade with Canada and Mexico, obviously. 

And then, as I mentioned yesterday when Ambassador 

Lighthizer was here, R&M Manufacturing, which is also a Minnesota small business, they have set contracts. They clearly say 

they will not be able to re-negotiate with their larger customers, regardless of material costs, which are going up. 

So I just have a strong concern about lost manufacturing jobs, 

just as happened historically, if history is our guide, back in the 

early 2000s, when this was done before. 

But, Mr. Secretary, can you just briefly dive into this a little bit 

about—and explain maybe? Has the Department really analyzed 

the broader supply chain economic effects that the tariffs could 

have in terms of job loss downstream in other industries, or on consumer prices, in general? 

Secretary ROSS. Yes, we have. In fact, we handed out, I believe, 

to each of the Committee Members a series of charts showing the 

interaction between steel prices and aluminum prices, historically, 

on auto production, on recreational vehicles, on construction, on a 

whole variety of industries. 

And we also have done our own analysis and have studied analytical reports by various other parties and have come to the conclusion that there, in the aggregate, will not be material damage 

inflicted. Indeed, this is a very small segment of the economy. The 

total tariffs that we were originally talking about before any exclusions for countries or products is less than one-half of 1 percent of 

the economy. 

Chairman BRADY. Mr. Marchant, you are recognized. 

Mr. MARCHANT. Thank you, Mr. Chairman. Thank you for 

being here, Secretary Ross. There have been quite a few press reports about the pending section 301 action. And I was hoping that 

you could shed some light on the process within the Commerce Department with regard to that investigation. 

Secretary ROSS. The Commerce Department supplied a lot of the 

analytical materials, as well as specific comments on specific aspects of the 301 to Ambassador Lighthizer. The U.S. Trade Rep, as 

29 

you are aware, is the lead on 301 investigations. But we put in 

endless hours on various of these specific remedies that you will 

hear being announced, and participated extremely actively in the 

inter-agency process with Ambassador Lighthizer and with other 

parts of the Administration. 

Mr. MARCHANT. So has Commerce conducted an analysis of the 

supply chains that will be affected by those tariffs? 

Secretary ROSS. By the 301s? Yes, sir. 

Mr. MARCHANT. And—— 

Secretary ROSS. We have looked at—and you will hear when the 

announcement is made—I think you will get a flavor for what it 

is—the remedies that are being sought. And then we can have a 

very fulsome discussion. 

Mr. MARCHANT. Okay. So we will be—at some point we will be 

able to get those studies. 

Secretary ROSS. Well, at some point the tariff—the 301 action 

will be announced, and it wouldn’t be very surprising if this Committee and others would request that we come and explain it. 

Mr. MARCHANT. Did the analysis include an evaluation of 

available capacity in other markets? 

Secretary ROSS. Well, I can’t answer that in detail without getting ahead of the President and his announcement. But I can promise you there is a huge amount of analysis that went into it. 

Mr. MARCHANT. I am assuming that Commerce believes that 

the proposed tariffs will have the effect of pressuring China to 

change its policies. 

Secretary ROSS. Our—the hope always in tariff imposition is to 

modify people’s behavior, yes. 

Mr. MARCHANT. Okay. Thank you, Mr. Secretary. 

Chairman BRADY. Thank you, Mr. Marchant. 

Mr. Higgins, you are recognized. 

Mr. HIGGINS. Thank you, sir. The United States produces twothirds of the steel it uses. Steel production today is no longer laborintensive, it is capital-intensive. It is through innovation. Steel is 

being made that is cheaper, lighter, stronger, and cleaner. China 

produces only about 2 percent of the steel used in the United 

States. So I think this debate is a small piece of a much larger 

problem. 

Mr. Secretary, you are known throughout all the financial journals as being a big global thinker. You are one of the most influential global thinkers in America. And when you look at the United 

States-Chinese economic relationship, it is a $600 billion relationship, annually. There are 275 Chinese students who are studying 

in America, 25,000 American students studying in China. 

Last year, Chinese investment in the United States for the first 

time exceeded United States investment in China. China is number 

one in patent production, which is an important indicator of future 

economic growth. But it is a place that America held for over a century. We got overtaken by China. We got overtaken by China. 

China is moving from a manufacturing assembly economy to a 

knowledge-based economy. 

People here are always whining about China, Democrats and Republicans. They cheat on their currency, they treat their people 

poorly, they have a horrible human rights record. Their water and 

30 

air quality is deplorable. But you know what they do? They invest 

in the growth of their own economy. 

China just invested or is investing $1 trillion to open up the Chinese economy to 60 countries in Europe, in Africa, in Asia, and 

Latin America, $1 trillion. They are positioning themselves for future economic growth. We have an infrastructure bill that is $200 

billion over 10 years. It is equivalent to the amount that American 

taxpayers financed for the rebuilding of Iraq and Afghanistan. 

Sir, you have a global vision. Please admonish this President and 

this Administration to do better to position the United States to 

compete, because the United States can compete effectively with 

any country in the world, so long as there is a level playing field. 

What are your thoughts? 

Secretary ROSS. It is not quite correct, sir, to say that Chinese 

exports of steel and aluminum are as limited as you indicated. As 

I mentioned before, they dislocate a lot of production from other 

countries to us. They also veil the exports to us through transshipment with or without additional—— 

Mr. HIGGINS. Respectfully, sir, it is still a small part of a much 

larger problem. But I respect your—— 

Secretary ROSS. Well, it is. The problem is huge. And the 232 

actions are only part of a mosaic for dealing with it. You will hear 

more about China—a lot more—in the 301. 

Chairman BRADY. Time has expired. 

Mr. HIGGINS. I yield back, thank you. 

Chairman BRADY. Mrs. Black, you are recognized. 

Mrs. BLACK. Thank you, Mr. Chairman. 

And thank you for being here, Mr. Secretary. So much has already been said about China, we all feel that way, that we must— 

it is past time that we must do something about their operation 

and the way in which they operate, unfairly subsidizing stateowned enterprises and throwing barriers up for American products. 

And so I want to go back again to what has already been talked 

a little bit about, and that was—or talked a lot about, and that is 

the tariffs on steel and aluminum. In particular, in my district, 

Electrolux has a plant in the district of Springfield, which produces 

kitchen products. And this is a rural part of Tennessee. The plant 

employs over 2,500 full-time employees, which are drawn from all 

over the area. And the type of manufacturing plant—jobs that this 

plant provides really are sought not only by communities here in 

our country, but also all over the world. So, in short, this plant is 

very important to Springfield and the region that I represent in 

Tennessee. 

Earlier this year, Electrolux had announced that they were investing $250 million into a Springfield plant. That $250 million 

represents a huge investment in our community. They now, because of their concerns over the steel, have held up that investment 

and are not moving forward. 

So my question is what can I say to them, what can I say to the 

leaders of Electrolux to help to allay the fears that they have so 

they will once again invest in the community? And what should be 

the process that I tell them, moving forward, could help them allay 

those fears? 

31 

Secretary ROSS. Well, I certainly agree with you that fear of the 

unknown is one of the worst fears that people can have. And uncertainty about environment, the regulatory environment, the tariff 

environment, is a huge concern to business people. 

I think when you see the actual details of the President’s announcement, both on 232s and on the 301s, then you will be able 

to see a much more clear picture of what is actually going to happen. And I think it will clear the air a lot. 

Mrs. BLACK. Well, that makes me feel a lot better because I can 

tell you in these little rural communities it is very important. And 

2,500 full-time jobs is a huge loss in our community. 

Secretary ROSS. Surely. 

Mrs. BLACK. Thank you, and I yield back the remainder of my 

time. 

Chairman BRADY. Thank you. 

Mr. Kelly, you are recognized. 

Mr. KELLY. Thank you, Mr. Chairman. 

Mr. Ross, thank you so much for being here. In addition to that, 

thank you for stepping out of a very successful and comfortable life 

to come and serve your country. This is incredible. Listen, I have 

great respect for everybody on the dais, but there is nobody that 

has more depth and experience and knowledge when it comes to 

steel and aluminum than you do. 

One of the questions I do have for you—you referenced in your 

opening remarks electrical steel, and we are down to one producer 

of electrical steel in the country. I am very close to that, and I 

mean within a half-mile of AK Steel. We produce the finest electrical steel in the world and have thousands of employees. 

And the question comes up that, while that—the last producer, 

in the product codes—and this is where I am trying to understand 

them. You can help me with this, I am sure. You know, AK is really—they are very supportive of the 232 remedy that the President 

put in place, but they feel it has submitted several product codes 

that are basically just allowing electrical steel to be stacked, 

wound, and slit, and that allows foreign producers to easily circumvent the 232 remedy. So I know you are aware of these things, 

I just call it to your attention. We would love to work with you on 

that. 

The other point that I think we need to make is in addition— 

many of us support the action the President took to give Canada 

and Mexico special treatment. However, we can’t allow them or any 

future exempt country, for that matter, to become a conduit for 

transshipment. 

One of the other things—I know you are going to answer, we 

have so little time to talk—thank you. I have sat here for 8 years 

and listened to everybody talk about what we should be doing 

about this trade imbalance. You and the Administration are the 

only ones that have actually done something. So actions speak 

louder than words. Thanks for what you are doing. And I really 

welcome any type of work we can do together to protect that plant 

and make sure that we have electrical steel produced in this country. 

Secretary ROSS. Thank you. As you are aware, AK supports our 

program. 

32 

Mr. KELLY. Absolutely, yes. I am. The only question I think 

they have is on the stack steel, the electrical steel stack—— 

Secretary ROSS. Yes. 

Mr. KELLY [continuing]. That can be slit and wound and somehow put into the core of transformers. 

Secretary ROSS. And that raises a good question. One of our intentions is, as we locate potential sources of circumvention, to bring 

separate actions against those. Because, as you know, we have 

waged a lot of wars against circumvention already. 

I am well aware it isn’t just the steel, it is the end product—— 

Mr. KELLY. Right. 

Secretary ROSS [continuing]. Of the transformers that can be 

the big problem, and subcomponents within it. And I promise you 

we will not ignore that. 

Mr. KELLY. Okay. And anything we can do to help, please let 

me know. And I will give you the data that AK has given me, but 

you probably had it long before I did. 

But thank you so much for your service. Again, this is very refreshing to have somebody that actually knows something about 

this product and what is going on in the world, as opposed to people who run for office who don’t have a clue of what is happening. 

Thank you. 

Secretary ROSS. Thank you, sir. 

Chairman BRADY. Ms. DelBene, you are recognized. 

Ms. DELBENE. Thank you, Mr. Secretary, for being with us 

today. I have an aluminum smelter in my district that almost had 

to close, so I am definitely well aware of the issues of Chinese overcapacity and how that has depressed global—the global market and 

prices and undercut American workers and businesses. 

It is clear that something needs to be done to address the problem of over-capacity. But, as many of my colleagues have noted, it 

is extremely important that any action the Administration takes is 

targeted specifically to the source of the problem—in this case, definitely China. 

In order to truly address the problem of Chinese over-capacity, 

we need to work with our allies like the EU, Japan, and Korea, and 

use multilateral fora such as the G20, the G7, and the OECD, to 

develop a coordinated strategy. Do you agree with that? 

Secretary ROSS. I believe we do have a coordinated strategy. I 

believe I have tried to describe it. The exclusion process is intended 

to do the fine-tuning that is necessary to make sure that we minimize any unintended consequences. 

Ms. DELBENE. But you met with Commissioner Malmstrom 

from the EU recently. And would they feel like there is a coordinated strategy happening? 

Secretary ROSS. Yes. I think the actions we have taken will 

produce coordination with other countries. You probably saw the 

press release that she and I put out after our meeting and the one 

that we put out the day before, jointly with my counterpart from 

Germany. We think that the EU, in a whole variety of different 

ways, is part of the problem. 

Steel that comes in in the form of an automobile from Germany 

is every bit as much a problem as steel that comes in as steel. 

33 

Ms. DELBENE. A couple of quick questions. I have a technical 

question for you. The President ultimately decided on tariffs at 25 

percent for steel and 10 percent for aluminum. Will the Administration be updating those numbers, based on the number of country 

and product exclusions that might come out, and the impact that 

those have? 

Secretary ROSS. As it becomes more clear what is the extent of 

exclusions, both country and exemptions and product exclusions, 

we will present to him the consequences of those exclusions for the 

steel and aluminum industries, and he will decide whether it warrants imposing further tariffs on the countries that are still hit and 

on the products that are still hit. 

Ms. DELBENE. Thank you. And one quick question. Will there 

also be an exclusion process on 301, similar to 232? 

Secretary ROSS. I really don’t want to get ahead of the President 

on 301. He will be making an announcement in the relatively near 

future, very near future. And that is the time when we should have 

discussion. 

Ms. DELBENE. Thank you. 

Thank you, Mr. Chairman. 

Chairman BRADY. Thank you, Ms. DelBene. 

Mr. Renacci, you are recognized. 

Mr. RENACCI. Thank you, Mr. Chairman, and Secretary Ross, 

thank you for being here and for your testimony today. I would like 

to tell you about one of the many great companies in my district 

and their specific concern. 

The MK Morse Company is a family business that consumes 

steel in its manufacturing of saw blades. All of the manufacturing 

is done in Canton, Ohio, by their 485 employees. When possible, 

they source their raw materials domestically because of freight 

costs, currency risk, lead time, and their commitment to U.S. manufacturing. However, in many cases they must rely on foreign 

sources for their high-speed, steel-edged wire, steel strip back, or 

carbon steel strip, and hardened and tempered steel. 

Morse is one of the few saw blade manufacturing companies remaining in the United States, but they do not produce enough volume to attract the interest of U.S. steel companies. So they are required to source some of their steel from our foreign allies, whose 

steel mills focus on the saw blade industry, and therefore are capable of producing materials to exacting quality requirements. 

Secretary Ross, my question for you is President Trump’s steel 

proclamation includes reference to chapters 72 and 73 of the Harmonized Code, which are steel only. Saw blades are in chapter 82, 

and are not referenced. This is why Morse believes their competitors manufacturing outside the country will not incur the tariff 

when they export their steel-based product to the United States. 

And, frankly, I am concerned that companies and positions similar 

to Morse may be incentivized to move their manufacturing operations outside the country. 

So, in your conversation with U.S. manufacturers, how are you 

addressing the effect that these downstream implications could 

have on U.S. manufacturers? 

Also, what steps might the United States take to prevent the potential issue from becoming a real problem? 

34 

And, finally, is there any message you would like to relay to all 

the concerned manufacturers back in Ohio who make up the State’s 

largest sector by GDP? 

Secretary ROSS. Well, as you know, I have been in a variety of 

manufacturing businesses during my private-sector life. So I am 

keenly aware of the problems at the various different levels of the 

chain of supply. And those that are in the kind of circumstance 

that you describe probably are the ideal candidates, in concept, for 

exclusion. 

I also mentioned that we are mindful that taking product to another level of manufacture is one of the favorite ways that people 

circumvent our activities. We intend to deal with those in separate 

proceedings, anti-dumping and CVD proceedings. 

So this is not the last that you will hear about our solutions to 

the steel and aluminum problems, or any other problem. 

Mr. RENACCI. Well, thank you, Secretary Ross. And I, too, want 

to thank you for stepping out of the private sector and taking the 

position you are in. Thank you for your service. 

Secretary ROSS. Thank you, sir. 

Chairman BRADY. Thank you. 

Mr. Meehan, you are recognized. 

Mr. MEEHAN. Thank you, Mr. Chairman. 

Mr. Secretary, I give you credit for taking on the issue of Chinese 

dumping. But, of course, the implications of how you do that affect 

a lot of American-based businesses. American Keg is a developer of 

steel kegs, or aluminum kegs, the last in the United States. It competes against foreign imports. The problem is that its finished 

goods are not subject to tariffs, it is just the raw materials coming 

in. So they are now at a competitive disadvantage. 

I was intrigued by your comment about an automobile that 

comes in with finished steel or manufactured steel as another way 

of getting into the country. Are we going to be able to deal with 

companies that are going to be impacted like this, like American 

Keg, who will—are looking at laying off workers because a foreign 

keg can come in now at a disproportionate, you know, cost? 

And let me ask, as well—one more that is just industrywide. I 

have Ball Manufacturing, another steel company in my district 

that uses the sheet aluminum to make beer cans. Now, they will 

be one of a number of companies, but that industry alone could be 

looking at 1,500 applications to you just for can manufacturers. 

How can we simplify it so we can do it by industries or things 

like that, so that you have the capacity to be able to contemplate 

these and help create a level playing field for all? 

Secretary ROSS. Well, as I mentioned in response to an earlier 

question, we have to go by Harmonized Codes, because that is the 

only way the Customs and Border Protection can implement. So, 

unfortunately, we have to go number by number. And, literally, 

some of these codes are 10 digits long. But that is what they need 

for their computer system to be able to implement. 

On the specific question of—— 

Mr. MEEHAN. Well, can trade associations and others talk for 

similarly situated businesses, so a determination could be made 

that then could be applicable to other kinds of similar businesses? 

35 

Secretary ROSS. Well, as I mentioned, if we get an individual request from an individual company that is truly representative of an 

industrywide problem, we can deal with it on a broader basis. The 

powers delegated under the proclamation are quite broad. 

As to beverage cans themselves, as you are aware, it is my view 

that these tariffs, even forgetting the exclusions and exemptions, 

will have a trivial effect, a fraction of one penny on a can of Campbell’s soup, on a can of Budweiser, on a can of Coca Cola. And it 

is similarly small increments on many other things. 

So that doesn’t answer all the problems, but I think we need to 

put it into perspective. The total metal content of a can is two or 

three pennies, depending on the can size and the particular material used. So putting a tariff on a portion of that, it really is relatively small in the overall scheme of things. 

Chairman BRADY. Thank you, Mr. Meehan. 

Ms. Chu, you are recognized. 

Ms. CHU. Secretary Ross, I am going to drastically change the 

topic here, and ask a question that has been asked of my office 

nearly every day, and that is about the census. 

The Census Bureau, of course, is under your purview, but it has 

been reported that the Department of Commerce is considering 

asking—adding a citizenship question to the 2020 Census. And 

there is a lot of worry by immigrant stakeholders that adding this 

question will create a lot of fear, that many immigrants will fail 

to respond to the entire questionnaire, fearing that their legal status will come under scrutiny. There are many that argue that the 

numbers reported from the census will be more inaccurate, and 

that it will be more difficult to provide benefits and resources for 

low-income communities who are afraid to be counted. 

In fact, I have heard from many entities, including the LA County Board of Supervisors who unanimously wrote to Congress, urging opposition to the inclusion of the citizenship question, highlighting that LA County already faces great challenges in counting 

minorities, immigrants, and hard-to-survey populations. 

And in the 2010 Census, more than 113,000 Latino children in 

California and 47,000 Latino children in LA County were not 

counted, according to one survey that was done. 

So these inaccuracies make it hard and difficult for our government to administer important Federal safety net programs, such as 

WIC, SNAP, and TANF. Can you tell me whether the Department 

of Commerce plans to include the citizenship question in the 2020 

Census? 

Secretary ROSS. The Department of Justice, as you know, initiated the request for inclusion of the citizenship question. We have 

been talking on the phone and received written correspondence 

from quite a lot of parties on both sides of that question. There are 

many, many subquestions about accuracy, about suppression of responses that we are taking into account. 

We have not made a final decision as yet, because it is a very 

important and very complicated question. We will make a decision 

by March 31st, which is the date on which we are required to report to the Congress the final questions for the 2020 decennial census. 

36 

Ms. CHU. And I understand that this question has not been tested, which is usually the tradition with the Census Bureau also. I 

wanted to know whether you have factored in the additional cost 

of adding this question, this untested question. 

Secretary ROSS. The cost is one of the considerations. The comparison with the American Community Survey and annual sampling, which does ask the question, is another consideration. There 

are probably 15 or 20 different, very complicated issues involved in 

the request. Because it is from the Department of Justice, we are 

taking it very seriously, and we will issue a fulsome documentation 

of whatever conclusion we finally come to. 

Chairman BRADY. Thank you. Mr. Secretary and Members, we 

have 2 minutes left in the first of four votes. This is an important 

hearing. We will reconvene, Mr. Secretary, immediately after votes. 

Thank you for your patience. 

The Committee stands recessed until immediately after votes. 

[Recess.] 

Chairman BRADY. The Committee will come to order. 

Thank you, Mr. Secretary, for your patience during the vote series. We will resume with the questioning by Mrs. Noem. 

You are recognized. 

Mrs. NOEM. Thank you, Mr. Chairman, and thank you, Mr. Secretary, for taking the time to be with us today. 

In South Dakota we have a lot of pride in handling tough situations. We are pretty remote, so our transportation costs are pretty 

high. We consume a lot of energy, because we don’t have a lot of 

options. And we also deal with a lot of tough weather. And so we 

know, when it comes to agriculture, which is our number-one industry in this State, that it provides 20 percent of our State’s jobs. 

And it explains why so many of my constituents are really concerned about the tariffs in section 232, and what retaliatory measures could be taken against our American goods. 

But, Mr. Secretary, their biggest concern—because I am a lifelong farmer and rancher, and so these are my people and my family and my community members, everybody across the State—what 

concerns them is what appears to be a lack of concern on your part 

about what these measures—how they could impact the ag economy. 

And just this last week you said that we should judge results, 

instead of looking at theories. But I want to point to an example 

which proves that my constituents aren’t just scared of theories. 

On January 22nd the Administration announced new tariffs on 

washing machines and solar panel technology. Then, on February 

4th, less than 2 weeks later, after the Administration’s announcement, China launched an anti-dumping and anti-subsidy investigation into imports on American sorghum. 

Also, the Wall Street Journal reported yesterday that China is already targeting soybean and live hog exports for their next action. 

And it is not just happening with China. The European Union also 

is featuring agriculture in its draft retaliation measure list for the 

section 232 tariffs. 

And with soybeans being 27 percent of my State’s economy, we 

also know that it is $1.3 billion of exports out of South Dakota in 

2016, but Brazil and Argentina, they had less than 15 percent of 

37 

the export market worldwide back in 1980. Now they have over 

half. We know they are ready and standing, waiting to take up any 

kind of market space that opens up. And that is what the big concern is for a lot of my producers. 

So with all of these new tariffs that are being put into place, I 

would really like to know whether or not there is a lot of time 

being spent by the Administration, by you, and by your individuals 

that are—serve under you on what kind of impacts this could have 

on agriculture, considering we are already in a devastating commodity market, we are already facing huge challenges in agriculture. And now, if we have some of these measures going forward 

from other countries, I don’t know if we will survive. 

Secretary ROSS. Well, we are well aware of the potential problem. It is something we are giving great consideration to. And you 

will be hearing a little bit later today more about the actual exemptions, the exemption process for countries from 232, and you will 

be hearing later today more details about the 301. So pretty soon 

some of those questions will be answered. 

Mrs. NOEM. Okay. I would encourage you to keep agriculture in 

the forefront of your consideration, considering—— 

Secretary ROSS. We certainly are—— 

Mrs. NOEM [continuing]. They are in such tough times. 

Secretary ROSS [continuing]. And if I lapse at all in thinking 

about it, Sonny Perdue is very aggressive at making sure I pay attention. 

Mrs. NOEM. Thank you. I appreciate that, and I yield back. 

Chairman BRADY. Thank you. 

Mr. Holding, you are recognized. 

Mr. HOLDING. Mr. Secretary, thank you for being here, and 

thank you for your service. 

We all know there are products that are unfairly traded, and the 

Administration is right to target those unfairly traded products. On 

the other hand, there are products that are traded fairly, and 

which pose no national security risk. And I would hope the process 

is as efficient as possible in exempting these products. And I commend the Administration for trying to tackle unfairly-traded goods, 

but we need to be careful in that fairly-traded goods aren’t caught 

up in the mix and subject to increased tariffs. 

And there was one particular instance on a product that you and 

I have spoken about before. We get some specialty steel from the 

United Kingdom that is used in our nuclear submarine program. 

And even though the 232 investigation was initiated under a national security argument, this is a case, this UK steel nuclear submarine case, where it would actually, I believe, harm our national 

security to have that product subjected to higher tariffs. 

So, I just call upon you to comment on this case. I believe you 

are familiar with the factory in the United Kingdom that produces 

this specialized steel, and I believe you are aware of how it is used 

in our submarine program. And if you can, comment how the process that you have envisioned, that you are laying out, could possibly apply to a situation like this. 

Secretary ROSS. I am quite familiar with the steel situation in 

the UK. As you may be aware, when I was in the private sector 

I tried to buy the company—— 

38 

Mr. HOLDING. Yes, sir. 

Secretary ROSS. I am quite familiar with its product line. 

I think you are also aware I issued a joint press release with 

Commissioner Malmstrom yesterday outlining that we had had 

very constructive discussions, and I am optimistic that the EU will 

turn out to be a negotiated solution. And you will hear more about 

that a little later on today. 

Mr. HOLDING. Well, I thank you. And the—I appreciate the— 

working with the EU. And I would also like you to keep in mind 

that once the United Kingdom leaves the EU, that it will be our 

finest and best bilateral relationship on every level, from economic 

to military. 

Secretary ROSS. Well, we are keenly aware of the special relationship between the United Kingdom and the United States, and 

it is not my intention to do anything to disadvantage them in the 

context of Brexit. 

Mr. HOLDING. Thank you, Mr. Secretary. 

Chairman BRADY. Thank you. 

Mr. Smith, you are recognized. 

Mr. SMITH OF MISSOURI. Thank you, Mr. Chairman. 

Secretary Ross, thank you for being here, and thank you for your 

thorough—your great deal of work on the 232 investigations. 

As you may remember, I was with you back in the spring of last 

year, when the President signed the Executive order to look into 

the 232 investigations for aluminum. And after looking through 

your report, it followed through with what I had been asking for 

a couple years. And the Obama Administration refused to even look 

at it. 

In 2000, as your report also noted, we had 22 aluminum smelters, 22. And just here recently, we have two fully operational ones, 

and only one of those uses the high purity aluminum that is needed for our defense, for our naval vessels, for our aircraft, to protect 

Americans. And that is what your report provided, and I appreciate 

that. 

But I also want to tell you that, the day after that, our President 

issued these protections. I was able to stand in the Bootheel of Missouri, where an aluminum smelter had closed in March of 2016, 

and where we lost hundreds of jobs because they couldn’t compete 

with the illegal practices of China, to announce that, because of the 

President’s actions and other actions, 450 new jobs—with the possibility of up to 900—in a district that the median household income 

is $40,000, and the jobs will average $64,000 a year. 

So thank you, Secretary Ross, for doing what is right. 

And I don’t want to operate like some other Members of Congress 

by broadcasting my biggest concerns of how other countries may retaliate against us. That is the worst possible thing that we can do. 

But what I will ask you to do is to look into some countries, such 

as India, where they over-subsidize their agriculture products, like 

rice and other grains, that definitely is to the detriment of our 

farmers. I believe in free trade, but it has to be fair trade. And in 

order to make sure we have free trade, we have to punish those 

people who are in breach of contracts. 

39 

And I appreciate your Administration in working forward, and I 

just want to say thank you. I am not going to target you, I just 

want to say thank you, Secretary Ross. 

Secretary ROSS. Well, thank you. I am pretty familiar with the 

Indian situation. I had an office there for 6 or 8 years in Mumbai. 

So I understand quite a bit about India. 

Chairman BRADY. Thank you. 

Mr. Rice, you are recognized. 

Mr. RICE. Mr. Secretary, again, thank you for being here today. 

And thank you, sir, for taking on this job. Your experience and 

your intelligence in pursuing this is certainly to the benefit of our 

country and to the American middle class. 

You see, I focus on American competitiveness and on the middle 

class. And it is obvious, when you look at the numbers, that the 

American middle class has shrunk, and makes about the same 

amount of money today as they did in 1990. And I think that a lot 

of that problem is because we allowed our country to become a 

competitive—our tax code. We have worked on that. Our trade policy, and you are working on that. And so I applaud you for it. 

I know there are people who are concerned about the effects of 

these tariffs, and they should be. And it is complicated. But I am 

glad you have taken it on, because nobody denies that the American middle class hasn’t suffered because of unfair trade practices. 

So I just wanted to give you the floor to talk about how you 

think, in the big picture, that this will affect the American middle 

class. I have two steel mills in my district. One of them closed, and 

they are reopening partially because of these proposed tariffs. And 

I have other people who are affected in other ways. Uncertainty, 

as you said, is a big fear. So it is important to clear that up. I 

wanted to give you the floor to talk about those things and how you 

think this will affect the American middle class. 

Secretary ROSS. Well, a lot of the purpose of our trade practices 

has been to encourage companies to stay in the United States or 

come back, or foreign companies to come in. And when I was in 

Davos, the finance ministers of a number of the European countries 

were actually complaining about our new tax thing, saying they 

think maybe it is an unfair trade practice that we are cutting our 

taxes. 

And I said, ‘‘Well, maybe you should follow suit.’’ And it was not 

well greeted, because the particular ministers were not of a mind 

to cut taxes. 

The Administration is doing everything it can to reassure and to 

assure current American manufacturers. And I am heartened by 

the fact that, while there was a lot of controversy over the solar 

panel 301 decision, reality is plants are reopening here, the sky has 

not fallen, and we have to take some risks in order to change the 

terrible practices from before. 

Many of these other countries have been able to victimize us for 

too many years, and it is taking a little while to adjust to the fact 

that it is not the same relationship anymore. 

Chairman BRADY. Time has expired. 

Mr. Schweikert, you are recognized. 

Mr. SCHWEIKERT. Thank you, Mr. Chairman. 

40 

Mr. Secretary, the joys of trying to do this in 3 minutes. So my 

first item is just an inherent concern—and you see it in the Wall 

Street Journal and others—is that as tariffs move toward the bulk 

commodity side, that the fabrication side gets done offshore. And 

being from Arizona, where we do lots of very specialized fabrication 

for aerospace, for technology, allay my concerns. 

Secretary ROSS. Right. Well, I handed out some charts to the 

Committee showing the trends in commodity prices of steel and 

aluminum versus output in the consuming industries. And I think 

you will see there is relatively little correlation between the two. 

Mr. SCHWEIKERT. Mr. Secretary, in having looked at the 

charts, I respect the concept saying, hey, the input cost did not 

change much, but that does not change the incentive for the country that we believe is cheating by central planned over-capacity, or 

what it may—saying, fine, we will just do the finished product 

here, instead of shipping the bulk product. 

I mean, it is a legitimate concern. I would love to just find a 

much more elegant way to allay that concern that cheating doesn’t 

change to we will just finish the product and send it to you that 

way. 

Secretary ROSS. Right. Well, as I mentioned in response to a 

question earlier, we are fully prepared, if someone circumvents this 

by upgrading the product to a higher state of manufacture, we will 

bring trade actions against it. We have been very vigilant against 

circumvention. 

Mr. SCHWEIKERT. And you just moved to my—in a brilliant 

way, my second question. We are party to a number of bilateral 

trade organizations, some that have authority over a pursuit of 

over-capacity, you know, industrial policy, and we have international agreements to dial that back and penalize that. We have 

the WTO. 

What is happening in our bilateral trade agreements also as coupled with what we are doing unilaterally? 

Secretary ROSS. Well, the WTO—there is the global steel forum 

that has now met, I think, something like seven times. But, unfortunately, as is so often the case with big public fora, it has become 

a debating society without reaching any conclusion. We think that, 

historically, a lot of time has been wasted debating, rather than 

acting. This Administration will be activist. 

Mr. SCHWEIKERT. I will beg of you, even though it—the system 

doesn’t completely allow it—maximize transparency to avoid disruptions and—in pricing and commodities. And my fear is I spend 

a lot of time looking at futures, and I have seen a lot of weird 

things. Whether it be individual profiteering, it does create a cascade effect—— 

Secretary ROSS. Right. 

Mr. SCHWEIKERT [continuing]. Throughout the—we will call it 

the specialized fabricators. 

Secretary ROSS. Well, the last way to help the steel and aluminum industries would be to destroy their customers. So we are 

very, very mindful of that. 

Mr. SCHWEIKERT. Thank you, Mr. Secretary. 

Chairman BRADY. Thank you. Time has expired. 

Mrs. Walorski, you are recognized. 

41 

Mrs. WALORSKI. Thank you, Mr. Chairman. It is an honor, Mr. 

Secretary, to have you here. I want to talk about the graph that 

you referenced earlier. And I am grateful that you included the RV 

industry in this. 

You say this chart says that the RV industry will be fine. With 

all due respect, this chart cannot speak. But the RV manufacturers 

in my district can. What they and other manufacturers in my district have been telling me over the last year is that, while tariffs 

take effect tomorrow, the mere threat of tariffs has been felt already. 

One RV manufacturer told me the same model is 8.5 percent 

more expensive, compared to last year. A trailer manufacturer has 

had to raise prices 25 to 30 percent. He told me on the phone, ‘‘I 

am livid. We are getting destroyed.’’ He said the tariffs haven’t 

started, but they have been felt. 

I can tell you how many manufacturers have told me about steel 

and aluminum shortages already. I can’t tell you how many manufacturers who already source their steel and aluminum domestically, who we shouldn’t want to hurt, but have seen the price of 

their inputs increase, anyway. 

Again, the tariffs start tomorrow, but they have already been felt 

in these industries. I have heard from manufacturer sources from— 

I have heard from manufacturers that source from abroad not because they want to, it is because they are forced to. The domestic 

suppliers simply refuse to make the input for their specifications. 

Whatever happened to the customer is always right? 

Well, those business owners are now worried that the very same 

supplier that refused to make their product to specs in the last 

year now only needs to say that they could make it to prevent an 

exclusion, hurting these industries further. 

Here is the thing. The RVs, boats, and trailers manufactured in 

my district are price-sensitive. An 8.5 percent increase in the price 

of an RV is real money to real people. A couple looking at that increase may say, ‘‘Well, we are going to wait,’’ or, ‘‘We will simply 

go spend the money on something else.’’ For pontoon boats, a $.10 

increase in aluminum increases the boat cost by $750. So a company that normally sells 2,000 pontoons would only be able to sell 

400 with that increase, and pontoons are already on the EU retaliation list. 

Elkhart County saw 20 percent unemployment during the financial crisis. It was devastating for workers, families, companies, and 

communities. But they have rebounded. And unemployment is 

around 2 percent right now. But they are worried that the momentum that they worked so hard to claw back is about to be reversed. 

What your chart does show, Mr. Secretary, is that steel and aluminum prices have spiked in the last year, and what RV manufacturers are telling me that means for them is that where they once 

expected 10 percent growth this year, they are now hoping for flat 

growth. 

So I appreciate your charts that are trying to educate me on 

what is happening in my district, but I am telling you that simply 

is not the case. 

Secretary ROSS. I think it is unfortunate that there has been a 

lot of speculation on the part of people withholding inventory, peoVerDate Sep 11 2014 13:09 Mar 11, 2019 Jkt 033808 PO 00000 Frm 00045 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\33808.XXX 33808
42 

ple jacking up prices. If you look at the price movement, it actually 

is well in excess of any possible impact that the tariffs might have. 

So there has been a lot of speculation going on. 

I think you will see things adjusting, once people understand 

what the real situation is. I think it is very unfortunate that speculators tried to take advantage of the consuming industries during 

recent months. 

Mrs. WALORSKI. This is about jobs in my district. And we have 

seen the price increases in the last year. So what starts tomorrow 

I would have to see proven wrong pretty quickly, because this is 

a danger to jobs. 

Chairman BRADY. Thank you. All time has expired. 

Mrs. WALORSKI. Thank you, Mr. Chairman. 

Chairman BRADY. You bet. 

Mr. LaHood, you are recognized. 

Mr. LAHOOD. Thank you, Mr. Chairman, and welcome, Secretary Ross. 

I have to tell you, Secretary Ross, I disagree with your—the Administration’s approach when it comes to trade and tariffs. And 

what is a bit frustrating is last year we passed once-in-a-lifetime 

tax reform. We hadn’t done that in 31 years. It is having real effects on the economy. You look at regulatory relief, and in almost 

every sector of our economy we have had tremendous regulatory relief. 

And then I look at what the Administration is doing on trade, 

the tariffs, what is going on with NAFTA, the fact that we are 14 

months into this Administration and we don’t have one bilateral 

trade agreement. We talked about having a lot of those. And I 

think we are shooting ourselves in the foot when it comes to the 

economy as it begins to take off, with the low unemployment we 

have in this country. 

So I tell you that. And then I will just tell you a little bit about 

the district that I represent. Agriculture is the number-one industry in the State of Illinois. Many of the constituents in my district 

supported the President. Many in rural America did. And I look at 

what is going to happen because of your policies when it comes to 

trade, comes to tariffs. And the word that comes up all the time 

with my farmers is retaliation. 

You look at what has happened in the past. And the largest importer to China of soybeans is the United States. And that is— 

farmers are worried about that, and that retaliation. What can you 

tell my farmers to assure them that they are going to be okay? 

Secretary ROSS. Well, I think the real fear is the fear of the unknown. They all know that there is a potential vulnerability. I believe that the actual outcome of all this will be far less severe than 

things that people are worried about. 

The substitution of products from other countries into China, for 

example, displacing us will, for the most part, reopen those markets to American exports. So it will not be a one-to-one match, and 

it will not necessarily be simultaneous. But it is not an easy thing 

to substitute. 

I promise you, if China thought they could get the material as 

cheaply from Brazil or Argentina, they would be doing it right now. 

43 

Mr. LAHOOD. And let me just switch subjects. I want to quote 

something from the Tax Foundation. The title of this article is 

‘‘Lessons from the 2002 Bush Steel Tariffs.’’ ‘‘The effects of higher 

steel prices, largely a result of steel tariffs, led to the loss of nearly 

200,000 jobs in the steel consuming sector, a loss larger than the 

total unemployment of 187,000 in the steel-producing sector at the 

time.’’ Can you comment on that? 

Secretary ROSS. Yes. Those jobs that were lost were mostly lost 

in the months before the steel tariffs were put in by President 

Bush. So it is an inaccurate total, it is not due to that. 

Second, a large portion of the reasons why the steel industry 

didn’t gain more jobs is we worked a new contract with the Steel 

Workers Union. We cut 32 job descriptions down to 5. We made 

changes in work rules, so that people could be running more efficiently. 

I would be happy on another occasion to go into much greater detail, but the ITC in fact found that the ultimate effect of steel 

range is somewhere between 65 million positive to the economy 

and 135 negative, and that it was such small numbers relative to 

the economy that you really couldn’t pinpoint the difference. 

Chairman BRADY. The gentleman’s—— 

Secretary ROSS. So those alarmist things that you have seen in 

the paper do not have statistical support. 

Mr. LAHOOD. I look forward to—— 

Chairman BRADY. All time has expired. 

Mr. LAHOOD [continuing]. A followup conversation. Thank you, 

Mr. Secretary. 

Chairman BRADY. Thank you, Mr. LaHood. 

Mr. Bishop, you are recognized. 

Mr. BISHOP. Thank you, Mr. Chairman, and thank you, Mr. 

Secretary, for your time today. 

You faced a myriad of questions and issues. I would like to take 

this opportunity, as a Michigander, to sound the alarm on behalf 

of the American manufacturing industry. 

I represent Michigan. Our tool and die makers face every day 

Chinese tool and die makers who continually dump their product 

and undercut American prices, and now dominate the market for 

tools used by American automakers to produce major body sheet 

metal stamping. These companies in Michigan are desperate. They 

face extinction. 

And they personally told me the problem with competing China 

is more than just low wages. The Chinese government subsidizes 

stamping and die shops in many other ways. They have export 

credits, which refund up to 30 percent of the cost of tools. Their 

government builds elaborate, state-of-the-art tool and die shops 

filled with modern machinery and equipment before the company 

even moves in, and then they never ask for repayment. The government also subsidizes all kinds of training and—for their die makers. As a result of all of this, the business is going away. 

Prices for Chinese—Chinese prices are so low that American suppliers cannot afford to buy their major dies from anywhere else. 

Since no work exists here, in the United States, the industry has 

lost approximately 70 percent of the companies, and 80 percent of 

its skilled jobs. 

44 

One Michigan company, before the Chinese onslaught, advises 

me that they employed 350 people—this is a major company, one 

of the last remaining—they now only have 127 employees left in 

the arsenal of democracy. 

There is clearly a long-term component to Chinese strategy. 

The—when China controls the cost and delivery of the tools needed 

to produce major automotive parts, they will exert control over the 

world’s production of major equipment, tools, automotive supplies, 

even defense equipment. So this issue is far bigger than the economy. It goes all the way to national defense. 

I know we only have 3 minutes, but I would be remiss in not 

raising this issue to your attention. I hope that I can work with you 

and your Department to address this issue on behalf of not just the 

American automakers, but on behalf of our country, who are—we 

are caught flat-footed right now in a world that is stealing our 

manufacturing industry. And it behooves all of us to do whatever 

we can to work together to find a solution. 

So thank you for being here, and any thoughts you might have 

in your—sorry—you have only 24 seconds. I appreciate it. 

Secretary ROSS. Thank you very much. We are trying very hard 

to fix these problems. And the tragedy is that they weren’t dealt 

with sooner. It would have been a lot easier to do it sooner, because 

these malefactors have been spoiled by getting away with it for far 

too long. We intend to stop that. 

Mr. BISHOP. Thank you, sir. 

I yield back. 

Chairman BRADY. Thank you. 

Mr. Curbelo, you are recognized. 

Mr. CURBELO. Thank you, Mr. Chairman. 

Mr. Secretary, thank you so much for your time here today. I 

want to commend the Administration’s efforts to hold the Chinese 

accountable. I think it is clear to everyone that they undermine our 

economy, they undermine our workers. And holding them accountable is certainly the right thing to do. 

I would also ask the Administration to try to do right by our 

friends and allies throughout the world: The Europeans; here in 

the Americas, the Argentinians are concerned. These are countries 

that are trying to do right by the United States and by their own 

people, and I strongly encourage you to do everything you can to 

accommodate them so that we can continue building those important alliances and friendships. 

And I agree, I think trade is best conducted—business is best 

conducted with people with whom we share values. And I think, as 

long as the Administration’s policy fits that idea, I think it can be 

successful. But there are some very obvious risks that you have 

heard repeated here numerous times today. 

I want to bring a separate issue, but one that is very important 

to the farmer community in my district. South Florida is home to 

the largest ag—is one of the largest ag-producing areas in the State 

of Florida. The warm weather in South Florida allows our farmers 

to grow crops there, year-round. 

Despite a long-standing suspension agreement designed under 

U.S. trade laws to eliminate the injurious effect of the dump imports, Mexican tomatoes, Mr. Secretary, continue to surge into the 

45 

U.S. market, impacting the domestic tomato industry. Lack of enforcement and circumvention of these agreements since put in 

place in 1996 has intensified, as within that period—one of the 

most recent suspension agreements alone—2014 to 2016, imports 

from Mexico have risen 21.5 percent, while U.S. production has 

fallen 14 percent. 

This comes on the heels of a 303 percent increase in Mexican tomato imports over the last 25 years, with Mexico supplanting the 

United States as a dominant supplier in the U.S. market, all with 

supposed anti-dumping trade remedies in place. This is threatening 

the future of Florida and the larger domestic tomato industry. 

So, Mr. Secretary, I understand you were negotiating for a new 

anti-dumping suspension agreement with Mexican tomato exporters. Can you assure the Committee that you will work with the 

U.S. tomato industry to get an agreement that will eliminate the 

injury dumped Mexican tomatoes are inflicting on the domestic tomato industry? 

Secretary ROSS. Well, I have spent a lot of time, as you know, 

with the Tomato Growers Association in Florida, and at their request we reopened, with the consent of the Mexicans, the suspension agreement. It really has not worked the way that it was intended to. And that is, unfortunately, true of many of the trade 

agreements this country has had. We are trying to fix it. 

Mr. CURBELO. Thank you, Mr. Secretary. I yield back. 

Chairman BRADY. The gentleman yields back. 

Mr. Secretary, clearly, there is a pretty consistent message here: 

Support for cracking down on China’s theft of intellectual property 

and our technology, and strong support to make sure that American workers and families aren’t punished for China’s misbehavior. 

Your exclusion process is key to that. We encourage you to use all 

your resources and thoughtfulness in applying that exclusion process in a good, positive way. 

I also want to echo what other Members have said, which is we 

thank you for your service, your experience, your insight. It will 

make you the perfect person for this discussion at this time. 

With that, I would like to note Members of the Committee have 

2 weeks to submit written questions to be answered later in writing. Those questions and your answers, Mr. Secretary, will be made 

part of the formal hearing record. 

With that, the Committee stands adjourned. 

[Whereupon, at 11:43 a.m., the Committee was adjourned.] 

[Questions for the Record follow:] 

46 


33808A.008

Wilbur L. Ross 

Secretary of Commet·ce 

Responses to Questions fot· the Recot·d of a March 22, 2018, Hearing Before the U.S. House 

of Rept•eseotatives, Committee on Ways and Means 

Questions from Ranking Member Neal: 

1. Rationale for Final Decision on Tariffs 

ln your reports to the President, you recommended three options: a global tariff, a global 

quota, and targeted tariffs. Under the global tariff option, you recommended a 24 percent 

tariff on steel imports and a 7.7 percent tariff on aluminum Imports. The President 

ultimately decided to Impose a 25 percent tariff on steel imports and a lO percent tariff on 

aluminum Imports. What explains the difference between your recommendations and the 

tari£f levels that the President decided to impose? 

Answer: On March 8, 20 18, the President took action under section 232 of the Trade Expansion 

Act of 1962, as amended, to adjust imports of aluminum and steel by imposing a 10 percent ad 

valorem tariff on aluminum articles and a 25 percent ad valorem tariff on steel articles imported 

from aU countries except Canada and Mexico, efiective March 23, 20 18 (Proclamations 9704 

and 9705). The President concurred with my Department's tindings that aluminum and steel 

articles are being imported into the United States in such quantities and under such 

circumstances as to threaten to impair the national security of tbe United States. In the 

President's judgment, these tariffs are necessary and appropriate in light of the many factors 

considered, including the Department of Commerce's reports, updated import and production 

numbers for 2017, the failure of countries to agree on measures to reduce global excess capacity, 

the continued high level of imports since the beginning of the year, and special circumstances 

that exist with respect to Canada and Mexico. 

In the subsequent proclamations of March 22, Apri1 30, and May 31, the President exempted 

certain countries from the tariffs after reaching agreements to pursue satisfactory long-term 

alternative means to address the threatened impai1ment to U.S. national security. The President 

also allowed the exemptions for Canada and Mexico to expire in light of the failure to reach an 

agreement with those countries for satisfactory long-term alternative means to address the 

threatened impairment to U.S. national security. When the President detennined to exclude 

countries on a long-term basis, be considered whether it was necessary and appropriate in light of 

our national security interests to make any com:sponding adjustments to the tariff as it applies to 

other countries. The President detern1ined that, in light of the agreed-upon measures with the 

exempted countries, and the fact that the tariff will now apply to imports of aluminum and steel 

articles from additional countries, it is necessary and appropriate at this time to maintain the 

current tariff level as it applies to other countries. 

2. Measuring Success 

Your reports provided that the goal of the tariffs Is to a llow the domestic alumlnum and 

steel iudustries to re.ach 80 pct·cent of their production capacity. Who wiU determine when 
47 


33808A.009

the domestJc Industries have met this goal? How long do you anticipate the Administration 

will have the tarl(fs In place? What happens once the Industries reach the desired capacity 

targets? 

Answer: Proclamations 9704 and 9705 signed by the President on March 8, 2018, provide that 

the Secretary of Commerce shall monitor imports of aluminum and steel, and from time to time, 

review the status of such imports with respect to the national security, in consultation with the 

Secretaries of State, the Treasury, and Defense, the United States Trade Representative, the 

Assistant to the President for National Security Affairs, the Assistant to the President for 

Economic Policy, the Director of the Office of Management and Budget, and other senior 

Executive Branch officials as the Secretary deems appropriate. 

The proclamations provide that the Secretary of Commerce shall inform the President of any 

circumstances in the Se-cretary's opinion that might indicate the need for further action under 

Section 232 by the President. The proclamations also provide that the Secretary ofConuuerce 

shall infonn the President of any circumstance that in the Secretary's opinion might indicate that 

the increase in duty rates provided in the proclamations is no longer needed. 

The President considered a variety of factors in deciding to impose the tariffs, including the 

Department's report. It will take months or even a year for U.S. steel and aluminum producers to 

fully restart idled capacity and regain long-tem1 financial health. We believe the tariffs will need 

to be in place for a number of years to enable tbe goals of the tariffs to be achieved in protecting 

our national security. 

3. Impact on China & Coordination with Trading Pat·tners 

Do you bel.leve the proposed tariffs wUI have the effect of pressuring Chlua to change Its 

policies? If you do believe that, why? Is the Adminish·ation considering bow it can work 

wllb like-minded partners to address the ongoing issues in China'! What role do you 

envision the OECD Global Fortllll on Steel Excess Capacity having in this process'? 

Auswer: The Administration supports the need for effective policy solutions that enhance 

market function and reduce excess capacity. We are actively engaged with steel producing 

nations, including China, to address the systemic issues that led to the creation of steel excess 

capacity, particularly government subsidies and other support measures. We work closely to 

coordinate efforts with like-minded trading partners, , to press for the elimination of subsidies 

and other government supports for steel and for the overall healthy functioning of market 

mechanisms in the steel sector. The Administration supports bilateral and multilateral 

engagement on solutions to the excess capacity problem and is working with trading partners to 

address its root causes, for example in the Global Forum on Steel Excess Capacity. At the same 

time, the Administration values meaningful results and will not hesitate to continue to use tbe 

tools available to it to fim1ly respond to the causes and consequences of steel excess capacity. 

4. Impact of Country Exemptions on Tariff Levels 

In your report to the President, one option you reCOillJIJ.Cnded was a targeted tariff 

2 
48 


33808A.010

approach that would have Imposed a hJgher tariff on a smaller number of countries and 

allowed the countries exempted from the tariffs to Import at the same levels as they had in 

2017. At the time I am s ubmitting this question, USTR has already announced that Korea 

wiU receive a permanent exemption. T he Administr ation bas noted that it. is negotiating 

exemptions with numerous other countries as well. Is the AdminJstra tlon considering 

t·aislng the 25 and 10 percent tariff levels as the n umber of countJ·ies exempt from those 

tariffs Increases? lf so, what methodology will the Administration use to d etermine how 

much hJghcr the tarl((s would need to be In order to mal.ntaln their effectiveness? 

Answer: llte President stated in Proclamations 97 I 0 and 97 1 I signed on March 22, 2018, that if 

there is a decision to exclude on a long-tenn basis a particular country from tbe tariffs 

proclaimed in Proclamations 9704 and 9705, the President would consider whether it is 

necessary and appropriate in light of U.S. national security interests to make any corresponding 

adjustments to the tariffs as they apply to other countries. The President also directed in 

Proclamations 97 10 and 9711 that the United States Trade Representative, in consultation with 

the Secretary of Commerce and the Assistant to the President for Economic Policy, advise him 

on the appropriate means to ensure that imports from countries exempt from the tariff~ do not 

undennine the national security objectives of such tariffs. The President also noted he would 

consider directing U.S. Customs and Border Protection to implement aluminum and steel quotas, 

if necessary and appropriate. 

On April 30, the President signed a proclamation stating that the United States bad successfully 

concluded discussions with South Korea on a satisfactory alternative means to address the 

threatened impairment of our national security posed by steel article intports from South Korea 

(including a steel quota). South Korea's quota is expected to have a comparable impact on its 

steel exports to the United States as the tarifPs impact. 

On May 31 , the President signed proclamations stating that the United States had successfully 

concluded discussions with Argentina and Australia on a satisfactory alternative means to 

address the threatened impainnent of our national security posed by aluminum intports from 

these countries and with Argentina, Australia, and Brazil on a satisfactory alternative means to 

address the threatened impairment of our national security posed by steel article imports from 

these countries. When the President detennined to exclude countries on a long-tenn basis, he 

considered whether it was necessary and appropriate in light of our national security interests to 

make any corresponding adjustments to the tariff as it applies to other countries. The President 

determined that, in light of the agreed-upon measures with the exempted countries, and the fact 

that the tariff will now apply to imports of aluminum and steel articles from additional countries, 

it is necessary and appropriate at this time to maintain the current tariff level as it applies to other 

countries. The tariff on imports of aluminum from South Korea went into effect on May I. The 

tariffs on steel and aluminum went into effect on June I for Canada, Mexico, and the member 

countries of the EU. 

5. Country Exemptions 

T he Admlnlstratlon has provided temporary exemptions to a number of ames (Canada, 

Mexico, S. Ko1·ea, the EU countries, Australia, Brazil, and Ar gentina) as discussions to 

3 
49 


33808A.011

negotiate terms for permanent exemptions for those countries at·e under way. Notably, 

Japan has not been granted a temporary exemption. Why Is this the case and what Is the 

status of discussions, if any, with J apan ? 

Answer: As the President stated in Proclamations 9710 and 9711, we welcome any country with 

a security relationship with the United States not currently exempted to discuss with us a 

possible exemption based on a shared commitment to addressing global excess aluminum and 

steel capacity and production as an alternate means to address the threatened impai1ment to U.S. 

national security. Decisions about exemption are made by the President, based on his assessment 

of the factors described in his proclamations. 

6. Product Exclusions 

The product exc.luslons process has been In place now for a few weeks and we have been 

bearing from stakeholders with concerns and questions about how the product exclusion 

process is working in practice and how the Department of Commerce will handle certain 

situations. Please help to provide clarity and resolve some of the confusion by addressing 

the following: 

A. How will Commerce manage Information that an applicant designates as business 

confidential? WUI potential objectors have access to such Information? If so, subject 

to what protections? 

B. What criteria will Conunerce apply to determine whether a given product is 

available in the United States in sufficient quantities? 

C. What tools will Colllllterce use to take into account allegations made by objectors 

that, although adequate capacity may not exist today, capacity can be increased or 

re-purposed to meet particular demands In the neat· future? 

D. In a situation where an applicant asserts that a product Is effectively not available In 

the United States because specifications for a particular project concerning safety or 

other product qualities catmot be met domestically, how will Conunerce determine 

whether the applicant's representations about product quality and availability m·e 

accurate? 

Answer: (A) The Department requested that parties applying for or objecting to an exclusion 

request include only public infonnation in !heir submissions. The exclusions and objections 

forms include an area where pa1ties can indicate if they have additional proprietary or business 

confidential information that is relevant to their exclusion request or their objection. In some 

cases, the Department of Commerce may determine that additional inforu1ation of a propriety 

nan•re is necessary in order to make a detennination. In that case, the Department will provide 

instructions to the affected parties and will protect this information from public disclosure. 

(B) The Secretary of Commerce, in consultation with other federal agencie.s, has the authority to 

grant exclusions based on a demonstrated lack of sufficient U.S. production capacity of 

comparable products or specific national security-based considerations. On March 19, the 

Department published in tbe Federal Register procedures for the requests for exclusion and for 

submitting objections to exclusion requests. The review period for exclusion requests will 

nonnally not exceed 90 days. 

4 
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33808A.012

(C) The Bureau oflndustry and Security (BIS) is reviewing exclusion applications from 

domestic industry, and related objections, on a case-by-case basis in a fair and transparent 

process. As part of this process, BIS is also working closely with subject matter experts in 

enforcement and compliance within Commerce's lntemational Trade Administration, and with 

other interagency partners. The Deparunent will assess whether manufacturing capability can 

meet the technical parameters for the specific article in question, including if idle capacity being 

brought back online as well as new capacity. 

(D) The procedures published in the March 19 Federal Register set forth the requirements for 

submitting requests for exclusion and for submitting objections to such exclusion requests during 

a 30-day co1mnent period. After the 30-day comment period, a I 5-day period for interagency 

review and comment will follow, and then up to 45 days for the Department of Commerce to 

analyze and make a final detennination. We are confident that these procedures will allow us to 

make well infonned detenninations on exclusion requests and any related objections. 

5 
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33808A.013

Questions from Trade Subcommittee Ranking Member f>ascrell: 

1. Budget and TAA for Finns 

Can you explain this Administra tion's commitment to manufacturing jobs given the 

Department of Conunerce FY 19 budget request included slashing millions of dollm·s in 

funding for programs that promote exports, support local manufacturing communities, 

and provide trade adjustment (TAA) to firms? 

Answer : The Administration is creating manufacturing jobs through broad regulatory reform, 

unleashing energy resources, trade refonn and enhanced enforcement against unfair trade 

practices, and tax cuts to unleash capital. From January 2017 through May of2018, 

manufacturing employment has increased by 304,000 jobs or 2.5%. 

2. 232 Steel and Aluminum 

Your report recommended three options for tariffs and quotas to address the national 

security threat from our reduced aluminum and steel supplies. But the highest tariffs the 

report t·ecommended were 7.7 and 24. The President ultimately decided on tariffs of 10 and 

25. What explains the difference? Did he just round up? 

Answer: On March 8, 20 18, the President took action under section 232 of the Trade Expansion 

Act of 1962, as amended, to adjust imports of aluminum and steel by imposing a I 0 percent ad 

valorem tariff on aluminum articles and a 25 percent ad valorem tariff on steel articles imported 

from all coumries except Canada and Mexico, effective March 23, 2018 (Proclamations 9704 

and 9705). The President concurred with my Department's findings that aluminum and steel 

articles are being imported into the United States in such quantities and under such 

circumstances as to threaten to impair the national security of the United States. In the 

President's judgment, these tariffs are necessary and appropriate in light of the many factors 

considered, including the Department of Commerce's reports, updated import and production 

numbers for 2017, the failure of countries to agree on measures to reduce global excess capacity, 

the continued high level of imports since the begi1ming of the year, and special circumstances 

that exist with respect to Canada and Mexico. 

In the subsequent proclamations of March 22 and April 30, the President exempted certain 

countries from the tariffs after reaching agreements to pursue satisfactory long-term altcmate 

means to address the threatened impaim1ent to U.S. national security. The President also 

allowed the exemptions for Canada and Mexico to expire in light of the tailure to reach an 

agreement witb those cow1tries for satisfactory long-tenn alternative means to address the 

threatened impainnent to U.S. national security. When the President detennined to exclude 

countries on a long-tenn basis, he considered whether it was necessary and appropriate in light of 

our national security interests to make any corresponding adjustments to the tariff as it applies to 

other countries. The President detem1ined that, in light of the agreed-upon measures with the 

exempted countries, and the fact that the tariff will now apply to imports of aluminum and steel 

articles from additional countries, it is necessary and appropriate at this time to maintain the 

current tariff level as it applies to other countries. 

6 
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33808A.014

Considering the countries so far exempted from tariJJs, will the tariJJs announced by the 

President deliver the promised relief to domestic steel and aluminum industries? What is 

the Administration's plan for monitoring whether tariffs are working and how will the 

Administration modify the relief to adjust for real-world effects? 

Answer: Proclamations 9704 and 9705 signed by the President on March 8, 2018, provide that 

the Secretary of Commerce shall monitor imports of aluminum and steel, and from time to time, 

review the slants of such imports with respect to the national security, in consultation with the 

Secretaries of State, the Treasury, and Defense, the United States Trade Representative, the 

Assistant to the President for National Security Affairs, the Assistant to the President for 

Economjc Policy, the Director of the Office of Management and Budget, and other senior 

Executive Branch officials as the Secretary deems appropriate. 

The proclamations provide that the Secretary of Commerce shall inform the President of any 

circumstances in the Secretary's opinion that might indicate the need for ftuther action under 

Section 232 by the President. The proclamations also provide that the Secretary of Commerce 

shall inform the President of any circumstance that in the Secretary's opinion might indicate that 

the increase in duty rates provided in the proclamations is no longer needed. 

The President stated in Proclamations 9710 and 9711 signed on March 22, 2018, that if there is a 

decision to exclude on a long-term basis a particular country from the tariffs proc laimed in 

Proclamations 9704 and 9705, the President would consider whether it is necessary and 

appropriate in light of U.S. national security interests to make any corresponding adjustments to 

the tariffs as they apply to other countries. The President also directed in Proclamations 9710 

and 97 11 that the United States Trade Representative, in consultation with the Secretary of 

Commerce and the Assistant to the President for Economic Policy, advise him on the appropriate 

means to ensure that imports from countries exempt !rom the tariffs do not undermine the 

national security obj ectives of such tariffs. The President also noted he would consider directing 

U.S. Customs and Border Protection to implement aluminum and steel quotas, if necessary and 

appropriate. 

On April 30, the President signed a proclamation stating that the United States had successfully 

concluded discussions with South Korea on a satisfactory alternative means to address the 

threatened impairment of our national security posed by steel article imports from South Korea 

(including a steel quota). 

On May 31 , the President signed proclamations stating that the United States had successfully 

concluded discussions with Argentina and Australia on a satisfactory alternative means to 

address the threatened impaitment of our national security posed by aluminum imports from 

these countries and with Argentina, Australia, and Brazil on a satisfactory alternative means to 

address the tlueatened impairment of our national security posed by steel article imports from 

these countries. The tariff on imports of aluminum from South Korea went into effect on May 

I. The tariffs on steel and aluminum went into effect on June I for Canada, Mexico, and the 

7 
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33808A.015

member countries of the EU. 

3. China 301: Textiles and Apparel 

Noting that Cldna ships the US nearly $40 billion a year In textile and apparel goods, and 

that they were the overriding driver behind the loss of one ndlllon US jobs in that sector 

ove1· U1e past twenty years, why did the Adndnistration fail to put a single textile/apparel 

product on the 301 retaliation list'! 

Answer: The list of products was developed by trade analysts from several U.S. Govem.ment 

agencies reviewing, first and foremost, technology products that benetit from Chinese industrial 

policies. The list was refined by removing specific products identified as likely to cause 

disruptions to the U.S. economy. Products that made the list were ranked according to likely 

impact on U.S. consumers based on available trade data involving alternative country sources for 

each product. 

8 
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33808A.016

Questions (rom Rep. j enkins: 

1. Sec. 232 Steel & Aluminum Tariffs & Agriculture 

Secretary Ross, last Spring In a sim.llar bearing to tbis one I voiced my concern to 

Ambassador Llgbtbizer about using national security as the basis for trade restrictions 

since tltis action could lead to retaliation if another nation foUows suit and restricts its 

imports of U.S. products- like sorghum or soybeans- using similar rationale. While it is a 

good step to implement an exemption process that many Membe1·s here requested for our 

ames and trading partners following the proposed steel and aluminum tariffs, my concerns 

have only grown especially since other nations are Indeed preparing retaliation lists 

targeting farm products. Now, Secretary Ross, you have made comments recently about 

famUy farmers and ranchers who "scream and yell " when their nerves get rattled by the 

administration and you mentioned they even go so far as to write to their Member of 

Congress. You may not be aware, however, that the State of Kansas just last week declared 

a statewide drought emergency for all 105 counties, or that prairie blizzards •·oll tllrough at 

a moment's notice, or that we have had multiple years of large wildfires, some of' which 

bla7-ed an area many times larger than the entire District of Columbia. So, with my 

constituents' livelihoods dependent on both Mother Nature and foreign markets, why do 

you think America's farmers and the agriculture Industry are so nervous wben It comes to 

NAFf A or sudden tariffs? 

Answer: U.S. agriculture plays a critical role in the economic growth of our country and it is 

undeniable how important foreign markets are to your constituents. The President recognizes the 

ever-increasing importance of agriculture for economic growth and intemational trade and is 

fulJy committed to opening foreign markets to fanners and ranchers. This commitment was 

underscored by the creation of the Undersecretary for Trade and Foreign Agricultural Affairs at 

the U.S. Department of Agriculture and the recent appointment of the Chief Agricultural 

Negotiator in the Office of the U.S. Trade Representative. 

The Admjn.istration is working diligently on renegotiating NAFTA to protect our fam1ers, 

ranchers, manufacturers, and service providers from mtfair and unbalanced trade practices. In 

addition, we are using other tools at our disposal, such as tariffs, to help ensure free, fair, and 

reciprocal treatment. 

I can fully appreciate the concern that comes along with the Administration renegotiating 

NAFTA and implementing tariffs but we must continue to fight for free, fair, and reciprocal 

trade with our trading partners for the long-term benefit of our country and use all tools at our 

disposal. 

9 
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33808A.017

2. Softwood Lumber 

Secretary Ross, we know from the National Association of Home Builders tltat their 

members and ultimately home buyers, a re paying the price for tariJJs imposed last summer 

on imports of Canadian softwood lumber. Buyers are paying over $6,000 more for an 

aver age new home because of their lumber costs than they were in early 2016. American 

workers in the home building industry are paying, too. As I understand it, the effects of 

these lumber tariffs for 2018, wUI be a net loss of over 9,000 jobs and j ust over $576 mJJUon 

in wages and salaries. 

Additionally, a constituent of 111ine, named Steve, who owns and operates a pallet business 

in Topeka has also been caught up in having to pay highet· prices for his pallet kits. He then 

bas to pass these costs down the supply stream to his clients, like Futamura, a large 

manufacturer of cellophane in my district that needs Steve's paUct5 to ship out their 

product. And now, with incoming tariJJs on steel and a luminu111, the price of Steve's nails 

1u-e going up. Are negotiations continuing toward a settlement that would help stabilize 

softwood lumber prices'? 

Answer: TI1e potential loss of any jobs concerns me. However, w1der U.S. law, the Department 

must injtiate an antidumping duty (AD) and/or countervailing duty (CVD) investigation if a 

petition filed by a producer or worker in the United States meets the statutory criteria for 

initiation. Let me emphasize that the Department's administration of the trade remedy laws is by 

far the most transparent of our trading partners. As such, in all of our trade cases we provide an 

opportunity for all parties to submit comments and legal arguments pertaining to our 

investigation. I can assure you that the Department carefully considered the positions and 

comments raised by all parties before issuing our final determinations in the lumber 

investigations. As for an analysis of the impact of potential duties on an industry, under U.S. 

law, the Department must detennine the level of dumping and/or subsidization that is occurring, 

which is separate from the issue of the impact of any potential duties on downstream industries. 

The U.S. lntemational Trade Commission (lTC) conducts a concurrent investigation for injury 

that is independent of the Department's decision on duties and addresses separate criteria -

specifically, whether dumping and/or subsidies are causing, or threatening to cause, material 

injury to a domestic industry. Only if both the Department's and the ITC's final detenninations 

are affinnative will an order be issued. 

10 
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33808A.018

Questions from Rep. Paulsen: 

1. GTAP Usage 

ln your 232 report on steel producl~, you made dUTerent remedy recommendations based 

In large part on the results of a specific economic model. This economic model, known as 

the Global Trade Analysis Project (GTAP) Model, is well known for producbtg results 

covering dozens of industries, not just Import volumes ln the steel sector. 

a. Generally when an economic model is used In an official report, the report 

includes an appendix that provides an explanation of that model and the 

assumptions used. For example, the U.S. International Trade Commission's 2003 

report on the steel safeguard measm·es includes a technical appendix on the 

model they used. Your report does not include such an explana tion. Can you 

please provide the Committee with an explanation of tbe GT AP model and the 

specific assumptions that you used within your modeling·? 

Answer: The 232 steel analysis was conducted using the standard version of the Global Trade 

Analysis Product (GT AP) Computable General Equilibrium (CGE) model of global trade. 1 CGE 

models unite economic theory and empirical data to create practical tools for the evaluation of 

economic policies and their impact on the economy by employing mathematical representations 

based on economic theory to represent the optimizing behaviors of the different agents 

(households, !Inns, and government) in the economy. The mathematical behavioral 

representations are combined with an accounting system which ensures that the resource 

constraints confronted by an economy (or economies, in the case of multi-regional models) are 

accounted for by the model. Since a CGE model contains representations of all elements of an 

economy, it can trace all the feedback and flow-through effects of a policy change. 

The standard GTAP model assumes that economies are characterized by perfect competition and 

that there are constant returns to scale. Like all CGE models, the GTAP model makes 

assumptions with respect to the behavior of the macro economy. These assumptions regarding 

variables such as the govemment budget, aggregate employment, and interest rates are referred 

to as the closure of the model. ln our analysis, we employed a full employment closure, that is, 

the real wage is assumed to be flexible so that there is no change in the total employment level of 

an economy although employment in the individual industries can rise or fall depending on 

whether they are positively or adversely impacted by the policy shock. This closure can be 

thought of as representing the long-run outcome in which the economy has had sufficient time to 

fully adjust to the event being modeled. 

The standard GTAP model was used in conjunction with pre-release version 10 of the GTAP 

database. In its completely disaggregated form, the GTAP database contains data on 57 sectors 

and 141 regions for the year 2014. For our analysis we aggregated some of the GTAP database 

1 The s1andard model is documented in Erwin L. Coroug, Tbomas W. Hertel, Robert McDougall, Marinos E. Tsigas, 

and Dominique van der Mcnsbnogghe. 2017. "The Standard GTAP Model, Version7." Journal of Global Economic 

analysis 2 (I): 1-119 

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33808A.019

to 27 sectors (sec below) and 49 regions.2 

In addition to the GT AP database, supplemental U.S. and United Nations trade data accessed 

using the Trade Policy Infonnation System were also analyzed. In conducting the analysis 

shown below, the Deprutment fixed the imports of iron and steel from Argentina, Australia, 

Brazil, Canada, Korea, Mexico, and the European Union3 at their baseline levels. A 25 percent 

tariff was applied to imports from all other regions. 

Sector List for 232 Steel Analysis 

232 Model Sectors GTAP GT AP Sector Descriptions 

Sector 

Numbers 

1-8 Vegetables, fruits, nuts; Sugar cane, sugar beet; Plantbased fibers; Crops (not elsewhere considered), Oil 

Crops seeds 

Extraction& 13-18 Forestry; Fishing, Coal, Oil, Gas, Minerals (not 

Natural Resources elsewhere considered) 

9- 12, 19, 20 Bovine cattle, sheep and goats, horses; Animal products 

(not elsewhere considered); Raw milk, Wool, silk-wom1 

cocoons; Bovine meat products; Meat products (not 

Animal Products elsewhere considered) 

2 1-26 Vegetable oils and fats; Dairy products; Processed rice; 

Sugar; Food products (not elsewhere considered); 

Processed Foods BeveraRes and tobacco products 

Textiles 27 Textiles 

Wearin11. apparel 28 Wearin11. apparel 

Leather products 29 Leather products 

Wood products 30 Wood products 

Paper products, 31 Paper products, publishing 

publishing 

Petroleum, coal 32 Petroleum, coal products 

products 

Chemical, rubber, 33 Chemical, rubber, plastic products 

plastic products 

Mineral products 34 Mineral products (not elsewhere considered) 

Iron & steel 35 Ferrous metals 

Non-ferrous metals 36 Metals (not elsewhere considered) 

Metal products 37 Metal products 

Motor vehicles and 38 Motor vehicles and patts 

parts 

' More information regarding the GT AP database can be found in Aguiar, Angel, Sadri Narayanan, and Robert 

McDougall. 2016. "Au Overview of tbe GTAP 9 Data Base." Journal of Global Economic Analysis 1 (1): 181- 208. 

' These cow1tries are cousistem witb potential exemptions under discussion with these parmers, as described iu 

Proclamation 9711 of March 22, 2018. 

12 
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33808A.020

Other transportation 39 Transport equipment (not elsewhere considered) 

equipment 

Electronic 40 Electronic equipment 

equipment 

Machinery and 41 Machinery and equipment (not elsewhere considered) 

equipment 

Other manufactured 42 Manufactures (not elsewhere considered) 

products 

Constmction 46 Constntction 

43, 44, 45, Electricity; Gas manufacture, distribution; Water; 

Utilities 46 Constntction 

Transportation & 47, 48, 49, Trade; Transport (not elsewhere considered); Water 

Communication 50,51 transport; Air transport· Communication 

Financial Services 52 Financial services (not elsewhere considered) 

Insurance 53 Insurance 

Other Business 54 Business services (not elsewhere considered) 

Services 

55-57 Recreational and other services; Public Administration, 

Other Services Defense Education Health; Dwellings 

b. I understand that the GT AP model produces results for a variety of economic 

indicators, including output, impo1·t volumes, price levels, and net economic 

welfare. It would be helpful for us to see this information for both the steel sector 

and aU of the downstream and other sectors included in that model, as well as 

the overa ll U.S. economy. Can you provide that to us? 

Answer: Tite model results indicate that real GOP, a commonly used measure of welfare, will be 

mostly unchanged trom its baseline level, declining by less than 0.008 percent. Aggregate 

imports will decline by 0.444 percent by volume while the average price of steel in the US 

market will rise by approximately 4.5 percent. 

At the sector level, downstream sectors such as metal products, motor vehicles and parts, and 

constntction that use steel relatively intensively (either directly or indirectly), see their output 

contract slightly because of higher steel prices. 

Sector Level Import & Output Changes 

Change in Change In U.S. 232 Model Sector U.S. Import Output (%) Volume(%) 

Crops -0.05 0.05 

Extraction & Natural Resources 0.09 0.01 

An.imal Products -0.19 O.G3 

Processed Foods -0.11 O.QI 

Textiles -0.22 0.04 

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33808A.021

Wearing apparel -0.15 0.09 

Leather products -0. 10 0.20 

Wood products -0.18 -0.15 

Paper products, publishing -0.21 0,02 

Petroleum, c-oal products 0.04 0.02 

Chemical, rubber, plastic products -0.13 0,07 

Mineral products -0.10 0.03 

Iron & steel -21.90 6.36 

Non-ferrous metals 0.21 -0.26 

Metal products 1.22 -0.41 

Motor vehicles and parts -0.07 -0.25 

Other transportation equipment -0.12 -0.1 3 

Electronic equipment -0.15 -0.08 

Machinery and equipment 0.13 -0.24 

Other manufactured products -0,04 -0. 16 

Construction -0.26 -0.19 

Utilities -0.11 0.09 

Transpo11ation & Communication -0.11 0.00 

Financial Services -0.22 -0.01 

Insurance -0.16 0.01 

Other Business Services -0.14 0.01 

Other Services -0.14 -0.01 

c. Did the Department of Commerce use the GTAP model, or any other model, in 

making its recommendations on aluminum? If so, can you provide us \\1th those 

details'? 

Answer: TI1e Department used a partial equilibrium analysis to estimate the impact of an 

aluminum tariff on aluminum imports, with no modeled effects on domestic demand or price, 

and an assumption that domestic production would replace all imports removed due to a tariff 

or quota. In the partial equilibrium analysis, the differenc.e between production at 80 percent 

capacity utilization and current capacity utilization is set equal to the amount of imp011s that 

must be eliminated (as the entirety of the reduction in imports is estimated to be replaced by 

domestic production). The percentage reduction in imports detennines the quota level or, 

combined with a price elasticity of demand (change in demand over change in price) of - 1.72 

tor primary (unwrought) aluminum (-I. 77 for all aluminum), the equivalent tariff level. 

2. 232 Impa ct on Medical Device Industry 

Has the Administration considered the extent to which the decision to Impose tariffs on 

steel and a luminum could have a detrimental im pact on the ability of the U.S. medical 

device industry to continue developing innovative and life-saving technology? 

14 
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33808A.022

Answer: Components made of steel or aluminum are not covered under the President's 

Proclamations and not subject to the tariffs. Component manufacturers using steel or aluminum 

imports subject to the tariffs may request exclusions from the tariffs using the publicly available 

fom1s. 

3. 232 Impact on Minnesota Steel Industry 

Alumlmun and steel prices have increased by 40% since October; local manufacturers In 

my home state of Minnesota are unable to provide accurate quotes to consumers and some 

have bad to absorb these additional costs due to fixed price contracts. These companies are 

seeing an lnn ease In overbuying because consumers are tr ying to avoid both potential 

sbortages and the even blgher prices that will occur as a result of the 232 tariffs. Sec. Ross, 

bow do you explain this ta riff is in the best interest of not only our economy, but our 

national security, given the fact that prices will increase dramatically and our U.S. mills are 

unable to meet the current demand of materials? 

Answer: U.S. consumers of steel and aluminum products should expect that prices will stabilize 

in the months ahead as production in undemtilized U.S. steel plants and aluminum smelters 

ramps up and injects high volumes of American·made steel and aluminum into the market. 

Beyond increasing utilization in operating plants, mothballed steel and aluminum production 

facilities are now being restarted. 

4. Downstream Analysis of 232 Tar iffs 

Old the Department of Commerce conduct any klnd of downstream analysis on the 

announced steel and aluminum 232 tariffs? Can you quantify the Impact that the tariffs 

will have on steel and aluminum consuming Industries? 

Answer: Regarding the impact of tariffs on steel4

, the model results indicate that real GDP, a 

commonly used measure of welfare, will be mostly unchanged from its baseline level, declining 

by less than 0.008 percent. Aggregate imports into the US will decline by 0.444 percent by 

volume while the average price of steel in the US market will rise by approximately 4.5 percent. 

At the sector level, downstream sectors such as metal products, motor vehicles and parts, and 

constmction that use steel relatively intensively, (either directly or indirectly), see their output 

contract because of slightly higher steel prices. 

Sector Level Import & Output Changes 

Change in Change ln US . 232 Model Secto1· US. Import Output (%) Volume (%) 

Crops -0.05 0.05 

' These results take into account those countries being considered for exclusion, as described in Proclamation 9711 

of March 22, 2018. 

15 
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33808A.023

Extraction & Natural Resources 0.09 0.01 

Animal Products -0.19 0.03 

Processed Foods -0. 11 O.Ql 

Textiles -0.22 0.04 

Wearing apparel -0.15 0.09 

Leather products -0.10 0.20 

Wood products -0.18 -0.15 

Paper products, publishing -0.21 0,02 

Petroleum, coal products 0.04 0,02 

Chemical, mbber, plastic products -0.13 0,07 

Mineral products -0.10 O.o3 

Iron & steel -21.90 6.36 

Non-ferrous metals 0.21 -0.26 

Metal products 1.22 -0.41 

Motor vehicles and parts -0,07 -0.25 

Other transportation equipment -0.12 -0.13 

Electronic equipment -0.15 -0.08 

Machinery and equipment 0.13 -0.24 

Other manufactured products -0.04 -0.16 

Construction -0.26 -0.19 

Utilities -0. 11 0.09 

Transportation & Communication -0.11 0.00 

Financial Services -0.22 -0.01 

Insurance -0.16 0.01 

Other Business Services -0.14 0.01 

Other Services -0.14 -0.01 

5. 301 Impact on Supply Chains 

Has Comme•·ce conducted any kind of analysis of the supply chains that will be affected by 

the 301 tariffs? Did this analysis include an evaluation or available capacity in other 

markets, including the U.S., to produce cover ed goods? How quickly does Commerce 

believe companies can adjust their supply chains to shift sourcing away from China? 

Answer: Commerce has examined trade statistics concerning U.S. import dependence on China 

on individual tariff lines. Conm1erce has also assisted USTR in reviewing the public cot1ffi1ents 

that were subtnitted in response to the Federal Register Notice on the 301 tariffs and has 

provided USTR with recommendations on any changes to the list based on analysis of positions 

in these connneots. 

6. Department of Commerce Business Outreach In advance of 232 Tar iJ'fs 

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33808A.024

Old you a5k any specific companies that IL~e steel and aluminum how the 232 tariffs would 

affect them? SpeciOcally, did you ask: 

d. How they might change sourcing patterns? 

e. How the t:u·iffs would affect their costs of producing in Ute United States? 

f. How the tariffs would affect tlleir global competitiveness? 

Answer: As part of the Section 232 steel and aluminum investigations, the Department 

published Federal Register Notices inviting interested parties to submit written testimony, data, 

analyses, or other information pertinent to the investigations. The responses provided by 

interested parties included information about sources, c.ost, and competitiveness. The 

Department also held two public hearings, both of which I participated in: the first about steel on 

May 24, 2017, and the second on aluminum on June 22, 2017. 

17 
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33808A.025

Questions from Rep. Black: 

1. Section 232 Tariffs and Medical Equipment that require Aluminum 

I have a specific question about medical equipment and how it could be impacted by the 

aluminum tariffs. 

Medical equipment is unique because reimbursement rates are set by public payers like 

Medicare, Medicaid and the Veterans Administration. These payers do not take into 

account increases in manufacturing or tariff costs when setting their rates. Increases like 

this tariff could have unintended and negative consec1nences on end users accessing the 

equipment they need. 

Fewe•· provide•·s means less choice for end u~er , thus limiting access to the medical 

equipment they need to maintain independence. Therefore, imposing a tariff of tO-percent 

on aluminum could have a dramatic impact on consumers and manufacturers. Has the 

Administration considered exempting medical equipment from these tariffs"? 

I appreciate your attention to this important issue and look forward to your response. 

Answer: Medical equipment itself is not subject to these tariffs, although aluminum imports 

used to manufacture such equipment may be depending upon the source. The Department has 

established procedures where individuals or organizations that use steel and aluminum articles 

identified in the President's proclamations may submit requests tor exclusions from the tariffs. 

These parties must use these steel or aluminum articles in business activities in the United States, 

such as construction, manufacturing, or supplying these articles to users. Any individual or 

organization in the United States may file objections to aluminum and steel exclusion requests, 

but the Commerce Department wiU only consider information directly related to the submitted 

exclusion request that is the subject of the objection. Each request for exclusion will be 

evaluated on a case-by-case basis, taking into consideration all factors including the potential 

impact on national defense and critical infrastructure projects. 

2. Anti-dumping Duties Imposed on Canadian ground wood Paper 

Mr. Secretary: 

I want to share with you concerns I am bearing from many Tem1essee manufacturers, 

public officials and small-town newspapers opposing preliminary new duties that 

Commerce bas imposed on Canadian imports of uncoated ground wood paper. As you 

know, this paper ~ used fm· newspapers, book publishing and commercial printing. 

The countervailing and anti-dumping duties that are now being collected impose a5 much 

as a 30-pcrcent rise on the U.S. cost of newsprint and other related paper. Since newsprint 

is the second largest expense for small newspapers after human resources, these tariffs will 

imperi.lmany small-town newspapers that are often the communicatiollS lifeblood of many 

small towns. 

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33808A.026

Only one firm, operating one mill, in j ust one location, with about 260 worker supports this 

action. Tha t mill, NORPAC, was recently acquired by a New York hedge fund and filed 

these petitions last summer. 

In Tennessee alone, these tariffs arc t·aising concern across the newsprint supply chain that 

together represent at least 4,800 Tennessee jobs · 4,000 in the newspaper sector and about 

800 in the commercial printing and paper manufacturing sector. 

Nationally, with the exception of NORPAC, all other U.S. paper producers universally 

oppose tllis action, including the American Forest and Paper Association. Also opposed are 

book publishers, commercial printers and newspaper companies. Together, these sectors 

rep1·esent some 600,000 U.S.jobs. 

I won ·y about Commerce imposing new sanctions that may or may not pt·otect 2·60 jobs in 

one location while putting at risk some 4,800 Jobs in Tennessee and 600,000 across the 

counh·y. I ask that you provide me feedback on ways you might be able to use yom· 

discretion to el.iminate or shat·ply reduce the impact of these duties when you make a final 

determination on this matter. 

I appreciate your attention to tJJis important issue and look forward to your response. 

Answer: The loss of any jobs concems me. Howevet, under U.S. law, the Department must 

initiate an AD ancVor CVD investigation if a petition fi led by a producer or worker in the United 

States meets the statutory criteria for initiation. Let me emphasize that the Department's 

administration of the trade remedy laws is by far the most transparent of our trading partners. As 

such, we provide an opportunity for aU parties to submit comments and legal arguments 

pertaining to an investigation. I c.an assure you that the Department will considet carefully the 

positions and comments raised by all parties before issuing our final detenninations in this 

matter, which are now due to be announced on August 2, 2018. If the Department's fmal 

detenn.inations are affimmtive, the U.S. International Trade Commission (lTC) will conduct its 

final it~nry investigations. As for an analysis of the impact of potential duties on an industry, 

w1der U.S. law, the Department must detenuine the level of dumping ancVor subsidization that is 

occurring, which is separate from the issue of the impact of any potential duties on downstream 

industries. The ITC conducts a concurrent investigation for injury that is independent of the 

Department's decision on duties and addresses separate criteria - specifically, whether dumping 

ancVor subsidies are causing, or threatening to cause, material injury to a domestic industry. 

Only if both the Department's and the ITC's final detem1inations are affinnative will an order be 

issued. 

19 
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33808A.027

Q uestion f•·om Rep. Higgins: 

1. Uncoated ground wood Paper - AD/CVD Investigation 

l was very concerned to see recent a ction taken by your office on a petition to initiate 

countervailing and antidumping duties on companies that produce uncoated ground wood 

paper In Canada. I am concerned of the adverse Impact these proposed duties would have 

on our domestic newspaper production Industry, most notably local newspapers wbo arc 

very sensitive to potential drastic shifts in the price of newsprint. Was there an analysis on 

the Impact of the proposed duties on thts vital industry? 

Answer: The loss of any jobs concerns me. However, under U.S. law, the Department must 

initiate an antidumping duty (AD) and/or countervailing duty (CVD) investigation if a petition 

filed by a producer or worker in the United States meets the statutory criteria for initiation. Let 

me emphasize that the Department's administration of the trade remedy laws is by far the most 

transparent of our trading partners. As such, we provide an opportunity for all parties to submit 

comments and legal arguments pertaining to an investigation. I can assure you that the 

Depat1ment will consider carefully the positions and comments raised by all parties before 

issuing our final determinations i.n this matter, which are now due to be announced on August 2, 

2018. If the Department's fmal detenninations are affirmative, the U.S. International Trade 

Commission (IT C) will conduct its final injury investigations. As for an analysis of the impact 

of potential duties on an industry, under U.S. law, the Department must determine the level of 

dumping and/or subsidization that is occurring, which is separate from the issue of the impact of 

any potential duties on downstream industries. The rrc conducts a concurrent investigation for 

injury that is independent of the Department's decision on duties and addresses separate criteria 

- specifically, whether dumping and/or subsidies are causing, or threatening to cause, material 

injury to a domestic industry. Only if both the Department's and the ITC's final detenninations 

are afftrmative will an order be issued. 

20 
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33808A.028

Question from Rep. Sewell: 

1. Anti-Dumping and Countervailing Duties 

As you know, I represent Birmingham, Alabama, which is also known as 11 Ute Pittsburg of 

the South 11 • Birmingham was founded In the late 1800's as a hub for the Iron and steel 

Industry, and was the largest steel producer In the southern United States. Unfortunately, 

over the last few decades, my district has lost hundreds of high-paying steel jobs because of 

Illegally dumped steel fr om China. While in Congress, I have sh·ongly supported the many 

anti-dumping and counter vailing duty cases before the International Tr·ade Commission 

that have targeted dumped steel products by countries like China. Unfortwtately, some 

foreign producers are simply absorbing the additional AD and CVD duties. Ther·efore, 

even when a case Is successful, market conditions may not change for U.S. producers. 

Secretary Ross, are you willing to consider addt·esslng duty absorption i.n antidumping 

calculations? 

Answer: Strict enforcement of the AD and CVD trade laws is one of my top priorities, and the 

effective collection of duties is criticaL I appreciate your question of duty absorption, which is 

quite technicaL The Department bas two mechanisms at its disposal to address "duty 

absorption'' and a similar behavior known as "duty reimbursement," both of which undermine 

the effectiveness of the AD law. As you know, duty reimbursement occurs where a foreign 

producer or exporter pays the duty on behalf of the importer, or reimburses the importer for 

duties the importer paid. Where Commerce finds such behavior, it deducts the reimbursed 

amount from U.S. price, and effectively doubles the duty. For duty absorption, however, the 

statute instructs Commerce to make duty absorption detem1inations, when requested, in the 

second and fourth administrative reviews following the issuance of each AD order, and to report 

its results to the U.S. lntemational Trade Commission. The Conunission is then required by law 

to take Commerce's determination into acc.ount in its sunset determination, making it more likely 

for the order to be continued for another five years. l11e legislative history of the Uruguay 

Round Agreements Act, however, instructs Commerce not to deduct absorbed duties from U.S. 

price as it would in the case of reimbursement. Accordingly, Commerce reports the results of its 

duty absorption detennination to the Commission, and only imposes additional duties where it 

finds reimbursement of duties by the foreign producer or exporter. 

21 
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33808A.029

Questions from Rep. Meehan: 

1. Downstream Effects of Tariffs 

A number of downstream industry players rely on highly-specialized foreign manufactured 

steel and aluminum imports to adequately meet product specs. Do you think the domestic 

industry Is capable of handling the demand for steel from the U.S. downstream Industry 

when the tariffs arc Implemented? Where do you thlnk there arc gaps ln the domestic 

industry's capacity and bow does the Administration plan to add1·ess these gaps? 

Answer: U.S. steel and aluminum producers have been operating their manufacturing facilities 

at low, sub-optimal rates and have ample capacity to fulfill much of the increased demand. 

However, domestic companies can use the exclusion request process established by the 

Department to ensure the supply of steel and aluminum products not produced in the United 

States while avoiding having to pay tariffs. There is not a complete understanding of where 

production gaps are for steel and aluminum products made in the United States. Data collected 

through the exclusion request process will provide valuable information on specific types of 

products for which manufacturing is thin in the United States. 

2. Downstream Effects of Tariffs 

A recent report from the Trade Partnership Worldwide estimates that the tariffs would 

increase employment in the iron, steel, and aluminum sectors by 33,464 jobs, but would 

cost 179,.134 jobs throughout the rest of the economy. This equates to a net loss of nearly 

146,000 jobs in the U.S. While the tariffs will help some companies In the U.S. industry, 

they may burt other companies and employees. Has the Administration done Its own 

economic analysis of the Impact of the tariffs on U.S. jobs, particularly In the downstream 

industries? If so, what does the analysis indicate? How has the Administration taken into 

account the loss of downstream Industry jobs in Its decision to Implement the tariffs? 

Answer: The findings of the Trade Partnership Worldwide organization regarding estimated 

employment impacts flowing from the imposition of tariffs on imports of steel and aluminum 

products have not been validated by sin1ilar studies in peer-reviewed economic journals. Yes, 

the Department analyzed the downstream economic impact of potential steel tariffs using the 

standard version of the Global Trade Analysis Product (GTAP) Computable General Equilibrium 

(CGE) model of global trade and the results were presented in the Secretary's Report to the 

President. 

3. Tal"iff Exclusion Process 

As I understand it, trade associations will not be allowed to submit exclusion applications 

on behalf of the Industries they represent. I would argue that reducing the number of 

exclusion applications would greatly ease the significant processing burden that the 

Department faces. Can you tell us why the Commer ce Department would not accept more 

comprehensive exclusion applications for larger industry segments? Furthermore, can you 

tell me what additional resources, staffing, fm1ding, and office space that the Department 

22 
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33808A.030

will need In order to handle this process efficiently and effectively with no adverse Impacts 

or delays to US business ope1·at1ons? 

Answer: 

The exclusion determinations will be made on a case-by-case basis based on the information 

specific to the requesting individual or organization; it may include a single or multiple foreign 

sources; however, a total volume of imports will be authorized for a specific time period. We do 

have the discretion to make broader exclusions available to all importers if we find the 

circumstances warrant. 

Individuals or organizations that use steel and aluminum articles identified in the President's 

proclamations may submit requests for exclusions from the tariffs. These parties mltSt use these 

steel or aluminum articles in business activities in the United States, such as construction, 

manufacturing, or supplying these articles 10 users. The exemption request must necessarily 

specify the precise product. Otherwise, it would be impossible to determine whether to grant an 

exemption. This need for specificity is why companies are expected to respond on an individual 

basis. It would be inefficient for a trade association to submit a broad request, because the 

Department would need 10 follow up with individual companies to get specific infonnation. A11y 

process must also include the opportunity for public comment to allow U.S. steel and aluminum 

manufacturers to challenge specific exclusion requests, and we have specified 30 days, a 

minimal period. 

The Department has submitted a request to reprogram $5 million in Fiscal Year 20 18, to enhance 

SIS's ability to execute its new Section 232 exclusion process responsibilities, including through 

contractor support. For Fiscal Year 2019, BIS requested 13 positions and $4.lmill.ion for 

Industrial Base Survey and Assessment studies, which includes funding for the 232 

investigations and the processing of232 exclusion requests. In addition, ITA requested an 

increase of$4.8 million and 28 positions to (I) enhance and further develop its efforts to assist 

U.S. manufacturers and their workers through self-initiation of anti-dumping and countervailing 

duty cases and (2) establish a team devoted to enforcement and administration of Section 232 

remedies. These additional resources wiJl enable the Department to ensure it has the capacity to 

complete the increasing number of Section 232 investigations within the established statutory 

deadlines for the President and provide expert support during any remedy implementation, 

including processing exclusion requests. 

4. Tinplate Steel 

ln 2016, U.S. demand of tinplate steel was 2.1 million tons, while domestic tinplate 

production was 1.2 miiUon tons. It required Amerlcan manufactnrers to Imports of 42% of 

tinplate steel. to meet the demand~ to feed Americans. The Commerce Department and the 

lTC have determined that tinplate steel Is a separate category, requiring Its own 

consideration and examination, based on the depa1·tment 's long-standing policy, why Is the 

department promulgating a new policy that will not make a specific exemption for tinplate 

steel and thus taxing it at a higher rate, making It less available and more expensive for 

American mannfactul'ers? What substantial proof can you provide that a tariff on top of 

23 
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33808A.031

already other existing duties will encourage domestic producers to meet the demand for 

llnplatc that American manufacturers requlrc? 

Answer: Periodic reviews of the functioning of the Ham10ni:zed Tariff Schedule of the United 

States (HTSUS) can result in the reclassification of steel products. The setting of a distinct 

HTSUS number for tin plate steel had no connection to the Section 232 investigation conducted 

by the Department. The effect of a tariff on top of other existing duties in spurring domestic 

steel producers to manufacture tin plate products remains to be seen. The impact of market 

forces on ramping up tin plate production in the United States could take a year or more to 

understand. 

5. Implementation l>rocess 

Have you considered grandfathcrlng In aluminum and steel imported under contracts In 

place before the tariffs were announced on March 8, 2018? In my opinion, this would 

avoid disrupting the operation and finances of projects 1J1at are already budgeted and 

underway. 

Answer: TI1e President's March 22 Proclamations for steel and aluminum established 

procedures allowing relief "[fjor merchandise entered on or after the date the directly affected 

party submitted a request for exclusion[;) such relief shall be retroactive to the date the request 

for exclusion was posted for public comment." If an exclusion is granted, the party would then 

work with Customs and Border Patrol on the refund mechanism. 

6. Effect on T•·ade Relations 

Has the AdmlnistratJon conducted any analysis on the impacts of retallatory tariffs 

Imposed by some of our majo•· trading partners on U.S. businesses and consumers? If not, 

will the Administration commlt to rcvJewlng or ending the tariffs If they result In net 

economic harm to U.S. companies? 

Answer: Tbe Ad•uinistration is aware of and in the process of examining retaliatory measures 

taken or proposed by our trading partners. 

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33808A.032

Questions from Rep. Holding: 

1. Section 232 

Mr. Secretary, In your testimony you referenced the Department's discretion in the 232 

exclusion process. You mention the Department has the discretion to make broader 

exclusions available to all importers of particular products, which would essentially grant a 

blanket request on a particular item if certain criteria ar e met. This would be a positive 

step the Department could take, as it would save time and resources of all parties involved. 

The Department Is likely to receive Individual requests that are Indicative of an Industrywide problem and I encourage the Department to deal with these on a broad a~ s. Will 

you commit to proactively gr anting such blanket product exclusions when waH anted In 

o1·der to minimize the burden on U.S. job cr eato1·s·? 

Answer: Yes. We will make broader exclusions available to all importers if we find the 

circumstances warrant. 

2. U.S.-Anstralla FTA 

In October, USTR formally requested consultations with Australia under the U.S.-

Australia Free Trade Agreement on behalf of aggrieved U.S. investors in NuCoal 

Resources, Ltd. I understand is the first time that eithe1· the U.S. o1· Australia has invoked 

this portion of the free trade agreement, which speaks to the seriousness of the s.~ . This 

case has been ongoing for some years now. Meanwhile, U.S. Investors have lost the totality 

of their investment and suffered Irrepar able harm as a direct result of a state-sponsored 

expropriation, which would not have occurred in my home state of North Carolina without 

proper due process. How does your agency Intend to continue to pursue this matter ? 

Answer: The Administration places a high priority on ensuring full compliance with the 

obligations in our trade and investment agreements, including the Australia-United States Free 

Trade Agreement. Accordingly, we initiated consultations under the Investment Chapter of that 

Agreement to address a discrete investment dispute in the energy sector involving U.S. 

investors. We are continuing to engage with Australia regarding tbis ongoing matter 

3. Honsehold Aluminum Foil 

It bas been noted that the1·e is concern for products with no national security nexus from 

being caught up iu these new tariffs. One such product is household aluminum foil and 

container stock, which would be subject to the 10% tariffs ou aluminum. The U.S. 

Department of Commerce recently imposed antidumplng/countervaiUng duties on 

aluminum foU from China, which should seem to address unfairly traded imports from 

China. Currently, in t11e household aluminum foil market, the largest provider of privatelabel, o1· non-branded, household alwnlnum foil is an ESOP company, which gives the 

employees the ability to achieve the American dream by owning part of theh· successful 

biL Iness. Would the Department be amenable to a 232 product exclusion for household 

aluminum foil an d container stock? 

2S 
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33808A.033

Answer: In the Section 232 investigation, we found that aluminum is being imported into the 

United States in such quantities and under such circumstances to threaten to impair the national 

security of the United States. The President's actions adjusting imp01ts of aluminum into the 

United States is independent of any actions taken pursuant to U.S. unfair trade sta tutes. 

The Secretary of Commerce, in consultation with other federal agencies, bas the authority to 

grant exclusions based on a demonstrated lack of sufficient U.S. production capacity of 

comparable products or specific national security-based considerations. On March 19, we 

published in the Federal Register procedures for the requests for exclusion and for submitting 

objections to exclusion requests. The review period for exclusion requests will nonnally not 

exceed 90 days. We will review all properly submitted exclusion requests, including any request 

related to household aluminum foil and container stock. 

4. Recycled Trade with China 

The AdmlnlstJ·atlon Is pursuing a number of policy measures meant to improve trade 

between the United States and China. Beyond flUng a dispute at the World Trade 

Organization, what Is the Administration's str ategy for suppot·ting the tr ade of recyclable 

materials trade with China? Tbis trade supports thousands of American jobs and helps the 

environment because otherwise these materials could end up in a landfill. 

Answer: Commerce's International Trade Administration bas worked closely with the Office of 

the U.S. Trade Representative to address China's ban and new standards on imported recyclable 

and recycled material in the WTO Committee on Teclmical Barriers to Trade and the Import 

Licensing Conllllittee. In these fora, we have noted that China's new standards are not aligned 

with international standards because they have higher, unobtainable requirements for imported 

versus domestic materials. The United States Government, joined by other members of these 

fora including the EU, Canada, and Japan, in raising trade agreement concems on the effect the 

ban has on trade of legitimate recyclable and recycled material and the environment. The Trump 

Administration will continue to raise this issue in the WTO as well as bilateral engagement with 

China. 

26 
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33808A.034

Question from Rep. Jason Smith: 

1. Alwninum Exclusion l'rocess 

Secretary Ross, as you may know, the day after the President signed the proclamation 

pursuant to Section 232, a primary aluminum smelter In my district announced tbat It was 

restarting idled production and employing 450 workers. Tbese actions by U1c President arc 

a key step toward restoring a fairly traded market for primary aluminum in the United 

States, where our smelters are no longer subjected to unfair competition from subsidized 

and state-owned smelters all over the world. Countries, such as Canada and Mexico are 

curt·ently excluded from these tariffs and there Is potential for that list to be expanded. As 

you work through the excitL~ion process for products and countries, what factors, 

classifications, and tests are you using to dctcrmlne which countries may have an 

exemption·? 

Answer: On March 22,2018, the President authorized the moditication of the section 232 tariffs 

on aluminum and steel imports to temporarily suspend the tariffs for certain countries before they 

took effect (Proclamations 9710 and 97 11). Tariffs on aluminum and steel imports from 

Argentina, Australia, Brazil, Canada, Mexico, the member countries of the European Union, and 

South Korea were suspended until May I, 2018, pending discussions of satisfactory long-tenn 

altemate means to address the threatened impairment to U.S. national security. 

On April 30, the President signed a proclamation stating that the United States had successfully 

concluded discussions with South Korea on a satisfactory altcmative means to address the 

threatened impainnent of our national security posed by steel article imports from South Korea, 

including a steel quota. 

On May 31, the President signed proclamations stating that the United States had successfully 

concluded discussions with Argentina and Australia on a satisfactory alternative means to 

address the threatened impairment of our national se.curity posed by aluminum in1ports from 

these countries and with Argentina, Australia, and Brazil on a satisfactory alternative means to 

address the threatened impaim1ent of our national security posed by steel article imports from 

these countries. The tariff on imports of aluminum (rom South Korea wen! into effect on May I. 

The tariffs on steel and aluminum went into effect on June I for Canada, Mexico, and the 

member countries of the EU. 

Questions Crom Rep. Walorski: 

1. 232 Downstream Impact 

The steel and aluminum reports reference economic studies that were carried out to 

evaluate the Impact of the tariffs on jobs. But your reports only reference the Impact 

directly to the steel and aluminum industries, not to their downstream value chain or to the 

US. economy as a whole. 

Wbat was the result of the Department's economic model used to create the three 

recommendations to the President on downstream users and consumers as well as the US. 

27 
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33808A.035

economy as a whole;! In considering negative 232 impacts to downstream stakeholders, 

what specific information was given to you a nd the BIS stafi by downstream stakeholders 

regarding compa ny, j ob or consumer Impact? What was studied? 

Answer: Testimony was provided to the Department ofCotmnerce through a pubhc hearing and 

through other infonnation submissions by all segments of the U.S. steel and aluminum 

manufacturing industries as well as steel and aluminum consuming organiza tions. 

Regarding the impact of tariffs on stee1

5

, the model results indicate that real GDP, a commonly 

used measure of welfare, will be mostly unchanged from its baseline level, declining by less than 

0.008 percent. Aggregate imports will decline by 0.444 percent by volume while the average 

price of steel in the US market will rise by approximately 4.5 percent. 

At the sector level, downstream sectors such as metal products, motor vehicles and parts, and 

construction that use steel relatively intensively (either directly or indirectly), see their output 

contract because of slightly higher steel prices. 

Sector Level Import & Output Changes 

Change In Change In U.S. 232 Model Sector U.S. Import 

Volume (%) Output (%) 

Crops -0.05 0.05 

Extraction & Natural Resources 0.09 O.ot 

Animal Products -0.19 O.o3 

Processed Foods -0.1 1 0.01 

Textiles -0.22 0.04 

Wearing apparel -0.15 0.09 

Leather products -0.10 0.20 

Wood products -0.18 -0.15 

Paper products, publishing -0.2 1 0.02 

Petroleum, coal products 0.04 0.02 

Chemical, rubber, plastic products -0.13 O.o7 

Mineral products -0.10 0.03 

Iron & steel -21.90 6.36 

Non-ferrous metals 0.2 1 -0.26 

Metal products 1.22 -0.4 1 

Motor vehicles and parts -0.07 -0.25 

Other transportation equipment -0.12 -0.13 

Electronic equipment -0.15 -0.08 

Machinery and equipmelll 0.13 -0.24 

5 These results take into account those countries being considered for exclusion, as described in Proclamation 9711 

of March 22, 2018. 

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33808A.036

Other manufactured products -0.04 -0.16 

Constmction -0.26 -0.19 

Utilities -0.11 0.09 

Transportation & Communication -0.11 0.00 

Financial Services -0.22 -0.01 

Insurance -0. 16 0.01 

Other Business Services -0.14 0 01 

Other Services -0.14 -0.01 

Z. Z3Z Impact on MWP 

All aluminwn and prodncts produced her e in the U.S. along with exempted Canada do not 

carry the 10% tariff, yet the MWP is already artificially inflated and pricing all a luminum 

a t the same higher tariff price. Who wUJ protect the American consumer from price 

gouging, against smelters and tl·aders who have already ar tificially inflate prices on 

aluminum produced and already stored here in the U.S. are exempted from Tariffs? 

Answer: The Midwest Premium on aluminum reflects market conditions. Over time increased 

production by steel manufacturers in the United Stales will result in an expansion of aluminum 

product supply that could result in lower prices. As pointed out in the January 19,2018, Section 

232 report on the effect of imports of alwninum, U.S. manufacturers have been operating at a 

fraction of their production capacity. With the imposition of the tariffs, aluminum companies are 

boosting production at their plants and reopening idle plants- actions that are anticipated to 

result in increased supply and, over time, lower prices. 

3. Z3Z Impact on Aluminum In Storage 

In the US we have an ove1·supply of aluminum in storage. Do you think that cun ·ent 

inventories of US produced aluminum should be allowed to be sold to end users if U1e tariff 

is included in the base price'! In other words, who will stop traders from selling metal 

currently sto1·ed In warehouses here In the U.S. at the artificially inflated duty-unpaid 

price, which wa.~ previously Imported from non-exempted countries prior to the tariffs 

implementation? 

Answer: Imported aluminum in bonded warehouses will be subject to tariffs when it leaves the 

warehouse, unless the tariff already has been paid. The selling price of aluminum is detennined 

by supply and demand factors in the market. 

4. Commer ce Self-Initiated AD Investigation on Chinese Aluminwn Sheet 

I understand the Department of Commerce has self-Initiated an antidumping l.nvestlgatlon 

regarding Chinese a luminum sheet. This is the first self-Initiation Commc•·ce has conducted 

in nearly 30 yea1·s. Other than the aluminum industry, have you consulted with other 

downstream users? Do you plan to take into account the Z3Z tariffs in thJs antidwnping 

investigation? It is my understanding beverage cans ar e outside the scope, would you 

29 
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33808A.037

consider larger sheets of aluminum (72" ) that are needed for marine and RV 

mauufact.uring and difficult to obtain domestically. 

Answer: Under U.S. law, the Department must detennine the level of dumping and/or 

subsidization that is occurring, which is separate from the issue of the impact of any potential 

duties on downstream industries. The U.S. International Trade Commission (ITC) conducts a 

concurrent investigation for injury that is independent ofthe Department's decision on duties and 

addresses separate criteria - specifically, whether dumping and/or subsidies are causing, or 

threatening to cause, material injury to a domestic industry. Furthennore, the 232 tariffs were 

implemented recently, whereas the Department is examining time periods in 2016 and 2017 in its 

AD and CVD investigations of common alloy aluminum sheet. As for the scope of these 

investigations, the proposed scope language provides for an exclusion for aluminum can stock, 

which is suitable for use in the manufacture of aluminum beverage cans, or the lids and tabs of 

such cans. Additionally, Commerce has received comments from interested parties regarding the 

proposed exclusion of such products from the scope. Regarding larger sheets of aluminum, the 

proposed scope of the investigation covers common alloy sheet with a thickness of 6.3 mm or 

less, but greater than 0.2 mm, in coils or cut-to-length, regardless of width. Commerce has 

received a request to exclude certain larger widths of a luminum sheet, and will carefully evaluate 

all comments on the record before issuing its decision. 

5. Canadian Softwood Lumber 

The tariffs on Imported Canadian softwood lumber bave slgn111cantly Impacted the price of 

lumber here in the U.S .. That's certainly good news for U.S. Iumber producers. But it L~ 

also affecling the ablllty of my builders back in Indiana to provide affordable housing 

options fot· low- to moderate-income families. They are telling me their llllllber packages 

are up 30+% . What Is the administration doing to etL m·e the Impacts of these tariffs don't 

weigh so heavily on U.S. consumers? 

Answer: I agree that the availability of affordable housing is key to the economic growth of our 

country. However, under U.S. law, the Department must initiate an antidumping duty (AD) 

and/or countervailing duty (CVD) investigation if a petition filed by a producer or worker in the 

United States meets the statutory criteria for initiation. Let me emphasize that the Department's 

administration of the trade remedy laws is by far the most transparent of our trading partners. As 

such, we provide an opportunity for all parties to submit comments and legal arguments 

pertaining to an investigation. I can assure you that the Department carefully considered the 

positions and comments raised by all parties before issuing our final detenninations in this 

matter. As for an analysis of the impact of potential duties on an industry, under U.S. law, the 

Department must detennine the level of dumping and/or subsidization that is occurring, which is 

separate from the issue of the impact of any potential duties on downstream industries. The U.S. 

International Trade Conunission (lTC) conducts a concurrent investigation for injury that is 

independent of the Department's decision on duties and addresses separate criteria - specifically, 

whether dumping and/or subsidies are causing, or threatening to cause, material injury to a 

domestic industry. Only if both the Department's and the JTC's fina l detenninations are 

affinnative will an order be issued. 

30 
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33808A.038

6. Foreign Trade Zones 

I am deeply conc.erned about the evaluation of Foreign Trade Zone (FTZ) applications for 

pt·oduction authority of products that contain textile Inputs. Two companies In my district 

are affected by this matter and each for different product applications. One of these 

applications has been pending for nearly 4 years and adversely affects Pregis, a smaiJ 

company in my district that supplies foam for Coleman life vests made in Sank Rapids, 

Minnesota . Life vests suffer from an invelied tariff, meaning they are subject to a 4.5% 

duty while the key fabric inputs are dutiable at 14.9% . A similar situation exists for MTD, 

a company that manufactures lawn mowers In Verona, Mississippi, which are duty-free If 

Imported as a finished good. One of Its key com onent~, a grass catcher bag is dutiable at 

3.8% A. Schulman, located in my district, provides MTD critical eng"meering composites 

for these lawn mowers. 

ln both cases affecting companies in my district, the current tariff structure lncentivlzes 

Importing the finished good from a foreign supplier over manufacturing the product here 

In the United States. When produced In the UnJted States, the O.nlshed good contains an 

enormous amount of U.S. value-add (for Instance, about 82% for Coleman), whereas there 

is esscnliaiJy no U.S. value in the imported product. Applications seeking 1<1Z production 

authority for products that contain textile inputs seem to be automatically denied if any 

negative feedback is received during the public comment pet·iod; regardless of the facts. l 

am highly concerned that the ITZ evaluation process, specincaiJy the net economic benefit 

test, Is not being propet·ly Implemented. Could you please detall the steps your Department 

takes In evaluating net economic benefit vis-a-vis applications that contain textile Inputs? 

Answer: Reviews of applications for FTZ production authority require the FTZ Board, 

comprised of representatives from the Department of Commerce and the Department of the 

Treasury, to examine, among other things, the extent to which the proposed activity is consistent 

with U.S. trade Jaw and policy, as well as the net economic effect of the proposed activity. With 

applications that request authority that would enable reduced duty payments on imported textile 

materials, the Board frequently receives comments in opposition from domestic producers of the 

types of textile materials in question. ln order to make a recommendation on whether to approve 

the application, the Board takes into account the evidence submined by all parties - whether in 

support of or in opposition to the application. The Board also considers input from industry 

specialists within government, including regarding the potential impact of the requested FTZ 

authority on domestic producers of the types of imported materials for which the applicant seeks 

FTZ benefits. 

31 
77 


33808A.039

Questions from Rep. Curbelo: 

1. Exclusion Process 

Because DOC plans to make the exclusion requests and objections publicly available, they 

arc warning ffiers not to submit any classified or btL~lness proprietary Information ln 

completing tl1e forms but advising that filers can sepa1·ately submit that type of 

Information. Given this decision, please explain the following: 

We are told by companies that it wiJI be almost in1possible to complete the 

exclusion request without revealing propriety information that they will not want 

competitors to see. Did DOC consider this problem when writing the form? 

Answer: The forms are designed so the filers do not have to provide proprietary infonnation in 

the Exclusion Request or Objection forms. For example, the chemical compositions of these 

metals are easily determined with standard laboratory equipment. The perfonnance data 

requested is nothing more than any disceming buyer would request of a supplier. Companies 

have not been asked to provide information on their proprietary manufacturing processes. 

Nonetheless, the fom1 does allow exclusion requesters to note whether they have relevant and 

necessary proprietary or business confidential infonnation. If the Department requires that 

information, it will request it from the party making the assertion. 

The process for attaching a separate document containing all or the business 

confidential Information Is a more burdensome p1·ocess than simply allowing fo•· 

the 11Jlng of a "business conlldentiai version" and a "public version" of the DUngs, 

as Is DOC's p•·actlce in antidumping and counter vaiUng duty cases. Why Is· DOC 

making this process more complicated for filers In this exclusion request context? 

Answer: The Department will only request companies to provide proprietary information if it 

thinks it necessary to detennine whether the product is truly unique or has substantially superior 

performance properties. 

On the exclusion request form, DOC is asking 111ers to provide an explanation regarding 

how U.S. Customs and Border Protection (CBP) will be able to ensure that the exclusion 

request Is recognized by CBP when a US Importer files entry paperwork for Imports that 

are covered by the •·cquest. Please explain bow DOC is working with CBP to ensure that 

CBP will fairly apply the exclusion request once it is granted. 

Answer: The Department has been working closely with Customs and Border Protection (CBP) 

in the development and implementation of the product exclusion process. The Department will 

notify companies granted exclusions, so they may infonn their in1porter of record (which may be 

the Exclusion Requestor or a third party). The Department will provide CBP with: I) the names 

of importers of Record that will be brittging in steel or aluminum products on behalf companies 

that bave been granted exclusion requests; 2) a general description of the steel or aluminum 

product (e.g., slab, sheet, bar, etc.); 3) the 10-digit Harmonized Tariff Schedule of the United 

States (lUSUS) code covering the specific steel or aluminum product being imported; 4) the 

Regulations.Gov tracking number issued to the Exclusion Requestor for the product covered by 

32 
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33808A.040

the granted exclusion request; and 5) the quantity of steel or aluminum product that may be 

imported under the granted exclusion. CBP will enter the tracking numbers established on 

Regulations.Gov for granted exclusion requests into the Automated Commercial Environment 

(ACE), the commercial trade processi11g system. This data will infom1 CPB staff administering 

tariffs on imported steel and aluminum products of the existence of an exclusion being granted to 

the identified exclusion applicant. CPB also will be able to puU detailed steel and aluminum 

information associated with the exclusion request filing by accessing Regulations. Gov. 

The product· exclusion process Is being conducted by BIS while the process of negotiating 

for country exemptions Is being conducted by Ambassador Llghthizer. Shouldn't the 

exemption determinations be made before the tariffs go Into effect this week? If not, 

companies may Invest time In money In the exclusion process only to find that a country 

exemption granted subsequently renders thei.t· product exclusion request unnecessary. 

Answer: The exclusion request and objection process operates independently of country 

exemption discussions. Companies are free to file exclusion requests for steel or aluminum 

products imported from countries currently exempt, knowing that the exemption status may 

expire. 

The r egulations provide that the exclusions will "generally" be approved for a period of 

one year. Does this mean that companies wUI have to me a completely new exclusion 

request each year even If no facts or circumstances r egarding the request bave changed? 

Answer: Yes, companies will need to file a new exclusion request before the expiration of any 

granted exclusions. The exclusion is limited to a set time period because there will be changing 

domestic production capabilities and product ava ilability as U.S. steel and aluminum 

manufacturers increase production. 

2. Trade Retaliation 

Many downstream users are concerned about the Impact of these tariffs on their 

manufacturing businesses. For example, boating Is an extremely popular activity In my 

district, supplying 330 businesses and 2800 direct jobs In my district. The boating Industry 

contributed $525 million in economic activity but Is extremely concerned about the Impact 

these tariffs will have on the Industry. Before the announced exemption, the EU threatened 

retaliation with US made boats as a target. This will Impact not just aluminum builders, 

but the entire Industry with export values of $366 mlll.lon. What are you doing to ensure US 

manufacturers are not Impacted by retaliatory actions? 

Answer: The President extended the tariff exemption for member states of the European Union 

on two occasions (March 23 and April 30), in order to allow our ongoing discussions to 

continue. These extensions reflected an earnest desire to try to arrive at satisfactory alternative 

means to address the threatened impainnent to national security caused by imports of steel and 

aluminum from the member states of the European Union. Unfortunately, our discussions have 

not yielded the necessary results, and as such, the Section 232 tariffs came into effect for imports 

of steel and aluminum from the member states of the European Union on June I. It is inlportant 

33 
79 


33808A.041

to remember that U.S. steel and aluminum producers need to be conunerciaUy viable to provide 

the steel and aluminum required for defense and critical infrastmcture applications. This is why 

excess capacity and surging steel and aluminum imports are national security concerns. Excess 

production by numerous countries has ham1ed steel and aluminum producers and jobs in the 

United States. 

Manufacturers In my district rely on aluminum for many component parts like fuel tanks. 

Aluminum fishing boats, populru· In my district and with retail businesses in my district are 

concerned about supply shortages, Increased prices, and difficulty obtaining wide sheets of 

alumi.num which Is critical to safe boat manufacturing. How are you ensuring actions to 

protect US aluminum will not harm other US manufacture•·s and businesses·? 

Answer: The exclusion process is available to companies to help ensure that they can obtain 

adequate supply of aluminum products of size, shape, and function that are not available in the 

United States in adequate quantity. 

3. lnvestlgatlon on Canadian uncoated groundwood paper 

In many conununities, the printed newspaper is the primary way in which people get news 

3lld infolmatlon, and stay colmected with one another. 

While this Administration's effort Is to use antidumping and countervailing dulles to 

protect U.S. Industries and U.S. jobs Is laudable, there are some situations where duties wlll 

simply backfire. In particular, the Commerce Department's Investigation and preliminary 

assessment of duties on Imports of Canadian uncoated ground wood paper, which Includes 

newsprint, is already having a damaging impact on newspapers. These duties which go as 

high as 32 percent have caused mills to announce price increases that climb as high as 20 

percent on a ton of newsprint. This is staggering for newspapers as newsprint is the second 

highest cost behind payr oll. 

We have heard that some small daily newspapers have cut back their distribution of the 

printed newspaper from 7 days to 3 days. Other small, community newspapers, are being 

told by suppliers that they will not get lltelr normal supply of newsprint given the 

disruption In the marketplace. Through these Increased prices or lack or supply, some 

community newspape1·s will go out of business. 

I am troubled that Ulis whole investigation was started by one mJJJ In Northwest 

Washington who petlt1oned for countel·wlfUng and antidumping duties. The petition was 

not supported by any other U.S. newsprint mills and ·in fact ·the petition is opposed by 

the paper industry's trade group, the American Forest and Paper Association. 

Secretary Ross, it appears to me that one company may be manipulating the trade Jaw for 

its own rmanciai gain, and in doing could set off a slew of unintended consequences including 

the loss of good US jobs in printing and publishing, as well as closures at small and mral 

newspapers. 

Secretary Ross, what would you recouunend I say to my constituents who are struggling to 

34 
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[Submissions for the Record follow:] 


33808A.042

cope with these tariffs'? WIU you commit to taking a closer look at this case a nd its impact 

on newspapers - a nd our society at large - before the Department issues a final 

determination in late summer ? 

Answer: The loss of any jobs concems me. However, under U.S. law, the Department must 

initiate an antidumping duty (AD) and/or countervailing duty (CVD) investigation if a petition 

filed by a producer or worker in the United States meets the stamtory criteria for initiation. Let 

me emphasize that the Department's administration of the trade remedy laws is by far the most 

transparent of our trading partners. As such, we provide an opportunity for all parties to submit 

comments and legal arguments pertaining to an investigation. I can assure you that the 

Department will consider carefully the positions and comments raised by all parties before 

issuing our fmal detenninations in this matter, which are now due to be announced on August 2, 

2018. If the Department's fmal determinations are affmnative, the U.S. International Trade 

Commission (lTC) will conduct its final injury investigations. As for an analysis of the impact 

of potential duties on an industry, under U.S. law, the Department must detem1ine the level of 

dumping and/or subsidization that is occurring, which is separate from the issue of the impact of 

any potential duties on downstream industries. The lTC conducts a concurrent investigation for 

injury that is independent of the Department's decision on duties and addresses separate criteria 

-specifically, whether dumping and/or subsidies are causing, or threatening to cause, material 

injury to a domestic industry. Only if both the Department's and the ITC's fmal determinations 

are affirmative will an order be issued. 

35 
81 


33808A.043

The Adverse Impact of Tariffs on Steel and Aluminum Products 

Alliance for Competitive Steel and Aluminum Trade (ACSA T) 

ACSAT Strongly Opposes Proposed High Tariffs on Steel and Aluminum 

ACSA T represents thousands of businesses across the United States who are deeply concerned about 

the Administration's proposal to impose sweeping global import tariffs on steel and aluminum on the basis 

of national security. We are convinced that these restrictions will have a significant negative impact on our 

businesses, employees and customers. The following is a brief outline of our concerns and 

recommendations. 

Damage to Downstream Users and American Consumers 

The proposed tariffs of 25% on all steel imports and 10% on all aluminum imports are far broader than 

required to address any legitimate defense or security needs and will cause severe harm to many of our 

most competitive industries by raising production costs and prices throughout our economy. The 

downstream industries that consume steel and aluminum are 40 to 50 times greater than these two 

sectors in terms of output and employment. Job losses and reduced competitiveness in downstream 

sectors will far outweigh any short-term benefits to steel and aluminum. Moreover, since steel and 

aluminum are vital inputs in a huge range of downstream products, these tax increases could impact 

millions of Americans through higher prices for essential purchases, such as autos, home appliances, 

food products and energy. 

Damage to US Exoorts 

Compounding the costs to our domestic industries will be the adverse effects on American exporters. 

Many trading partners have already announced their intention to retaliate against what they consider to 

be an unjustifiable use of the WTO national security exception. Ironically, the major impact of these 

restraints will fall on our NATO allies and other security partners, since China, the country cited by the 

Administration as the major cause of global overcapacity and widespread dumping, already faces high 

antidumping duties and represents only 3% of all US imports. Hence, our best allies in maintaining global 

security and our most reliable export markets will bear the brunt of these measures. This will intensify 

their resolve to retaliate and lessen their cooperation with us in pushing China and other countries 

towards fairer world trade. Retaliation by our closest partners places at risk our most competitive export 

sectors, including agriculture, aircraft, autos, machinery and equipment, IT and electronics, 

pharmaceuticals, plastics and chemicals. 

Damage to Economic Growth 

The American economy is strong and growing, and our manufacturers, farmers and service industries are 

seeing the benefits of the recent tax cuts and regulatory reforms. Our unemployment rate is at its lowest 

point since 2000, wage rates have begun to increase and GOP growth is increasing. Trade is a critical 

ingredient in these economic successes: More than 40 million American jobs depend on world trade; one 

out of every three acres of American agriculture is grown for export; and our manufacturing sector and 

technology-based industries lead the wortd in innovation. As the world economy continues to recover 

strongly from the great recession, this would be the worst possible time to tum inward and begin erecting 

trade barriers. For all the reasons outlined above, sweeping, long-term restrictions on imports of steel 

and aluminum will undermine, rather than advance, both our economic growth and our broader national 

security interests. 

Recommendations 

While we clearly need to address problems of unfair trade practices, subsidies and global overcapacity, 

mechanisms exist under our trade laws to address these specific problems without severely damaging 

the interests of competitive producers here at home. Moreover, policies to assist workers impacted by 

trade and to promote more competitive steel and aluminum production will be far more effective than 

prolonged import protection. 

ACSA T asks Members of Congress to consult with the industries and farmers affected by the proposed 

restrictions on steel and aluminum. The major committees of jurisdiction should schedule public hearings 
82 

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33808A.044

so that all interests can be heard. Congress has Constitutional authority to regulate foreign commerce, 

and we believe it is vital that all interests are weighed more fully before deciding what actions, if any, 

should be taken on national security grounds. Ultimately, Congress and the President should work more 

cooperatively to achieve the proper balance between trade concerns and other national priorities. 

About ACSAT 

ACSA T includes a broad cross-section of industries that produce intermediate and finished goods 

containing steel and aluminum as important inputs. It also includes a wide range of manufacturers and 

farmers that are among America's most export-dependent sectors. Our producers are leaders in 

productivity and technological innovation and depend upon open trade and competitive inputs to survive 

in the global economy. The members of our alliance stand ready to assist policymakers in Congress and 

the Administration to formulate more effective policies to address the challenges of international trade. 

Members of ACSAT 

Air-Conditioning, Heating, and Refrigeration Institute 

Alliance of Automobile Manufacturers 

American Automotive Policy Council 

American Chemistry Council 

American Exploration and Production Council 

American Fuel & Petrochemical Manufacturers 

American International Automobile Dealers Association 

American Petroleum Institute 

American Soybean Association 

American Supply Association 

American Wire Producers Association 

Associated Equipment Distributors 

Associated General Contractors of America 

Association of Equipment Manufacturers 

Association of Global Automakers 

Auto Care Association 

Beer Institute 

Can Manufacturers Institute 

Forging Industry Association 

Grocery Manufacturers Association 

Independent Petroleum Association of America 

Industrial Fasteners Institute 

International Association of Drilling Contractors 

LNG Allies 

Midwest Food Products Association 

Motor & Equipment Manufacturers Association 

National Automobile Dealers Association 

National Council of Farmer Cooperatives 

National Electrical Manufacturers Association 

National Foreign Trade Council 

National Pork Producers Council 

National Retail Federation 

National Tooling and Machining Association 

Outdoor Power Equipment Institute, Inc. 

Pet Food Institute 

Petroleum Equipment and Services Association 

Precision Machined Products Association 

Precision Metalforming Association 

Shelf-Stable Food Processors Association 

Truck & Engine Manufacturers Association 

U.S. Grains Council 

U.S. Wheat Associates 
83 


33808A.045

~cuitvBrands. 

The Honorable Kevin Brady 

Chainuan 

Conuuittee on Ways and Means 

1102 Longworth HOB 

Washington D.C., 20515 

April4, 2018 

Dear Chainnan Brady and Ranking Member Neal, 

The Honorable Richard Neal 

Ranking Member 

Collllnittee on Ways and Means 

1139£ Longworth HOB 

Washington D.C., 205 15 

We write to express Acuity Brands' concems about recently-enacted steel and almnimuu tariffs. 

Specifically, we are concerned that the tariffs- rather than achieving their purported goal of boosting the 

U.S. economy by supporting the steel and aluminum industries- will ham1 American businesses and the 

economy overall by negatively impacting steel prices and related business operations across a variety of 

industries. 

Acuity Brands, Inc. (NYSE: A Yl) is a North American market leader and one of the world's 

leading providers of lighting and building management solutions for commerc ia l, institutional, industrial, 

infrastmcmre, and residential applications throughout North America and select international markets. 

With fiscal year 2017 net sales of $3.5 billion. Acuity Brands currently employs approximately 13,000 

associates. We are headquartered in Atlanta. Georgia and have operations throughout North America and 

in Europe and Asia. 

The Company's lighting and building management solutions vary from individual manufacntred 

products to intelligent network systerns. Individual products include luminaires, lighting controls. 

emergency lighting, lighting components. controllers for various building systems (including HV AC, 

lighting, shades, and access control), power supplies. and prismatic skylights. 

We also offer networked systems driven by sensors and software that allow the infrastrucmre in 

buildings, roadways, and properties to comnumicate data regarding operations and activities. Among 

other benefits, these inte lligent network systems can optimize energy efficiency and enhance building 

occupants· experiences by providing wayfinding assistance, security notifications to law enforcement, 

and predictive controls that adapt based on teamed usage patterns for various indoor and outdoor 

applications- all while reducing operating costs. Acuity Brands C·Ontinues to expand its solutions 

portfolio, including software and services, to provide a host of other economic benefits resulting from 

data analytics that enables the "lntemet oflb.ings" ("loT') and supports the advancement of sruart 

buildings. smart cities, and the smart grid. 

Notably, our efforts to continue innovating and striving for even greater energy efficiency and 

sman nmctionality within all aspects of building management are substantially impacted by the price and 

availability of steel. Acuity Brands is a strong supporter and business partner of domestic metals 

suppliers, working with U.S. mills to source steel and manufacturing a significant volwue of our products 

at various locations across the country. We have worked closely with our steel suppliers to project usage 

trends and develop contracts that provide us with the fmancial certainty needed to promote cost-effective 

lighting and high-quality network solutions. 

Despite Acuity's relationships with domestic steelmiUs, however, our business still runs the risk 

ofbeir1g signific<lntly hanned by the recently-enacted tariffs. This is because many domestic mills 

purchase foreign raw materials, and as such, will be negatively in1pacted by the tariffs. Any process 

changes made by these steel mills in response to the tariffs are likely to increase the cost of the 
84 

f 


33808A.046

domestically-produced metals used by Acuity. In addition, the tariff changes will put a significant strain 

on the limited supply of domestic steel, as domestic capacity-even with new U.S. mills- cannot be 

ramped up for at least another year and may be constrained by other economic and workforce factors. 

All of this puts Acuity's existing contracts at risk and creates significant uncertainty for our 

business. Furthermore, while we appreciate the work on and attention to cotmtry-specific exemptions 

from the tari tis, many of those are tempornry. Thus. rather than helping provide supply chain stability, the 

exemptions may add more uncertainty to our sourcing strategy. 

Aside from the aforementioned specific impacts on Acuity, the tariffs also will broadly affect the 

lighting, constnaction, and a variety of other industries. For example, construction projects focused on 

energy-efficient renovations are at risk due to pricing uncertainty that has resulted from the tariffs. A 

slow-down in renovations-never mind new constmction- will have a negative impact on our company's 

sales. as well as curtail the envirorunental benefits, monetary savings, and jobs resulting from 

constntction of energy-efficient buildings. 

We appreciate Congress's attention to the potential real-world impacts of the steel and altm1inum 

tariffs on domestic industries and U.S.-based businesses like Acuity Brands. We ask that Congress 

continue to work with the Administration to properly tailor the new tariff regime to minimize hann to 

U.S. businesses and the ec-onomy. 

CC: The Honorable David Reichert 

Chairman 

Subcommittee on Trnde 

Committee on Ways and Means 

1103 Longworth HOB 

Washington D.C .. 20515 

The Honorable Bill Pascrell, Jr. 

Ranking Member 

Subcommittee on Trade 

Committee on Ways and Means 

II 03 Longworth HOB 

Washington D.C., 20515 

Cheryl English 

VP, Government & Industry Relations 

Acuity Brands 

Cheryl.English@AcuityBrands.com 

770-860-2660 
85 


33808A.047

House Committee on Ways and Means 

"Hearing with Commerce Secretary Ross" 

~~!~~ Fuel& PetrOChemical M3111Jfacturers 

Statement for the Record, American Fuel & Petrochemical Manufacturers 

March 22, 2018 

The American Fuel & Petrochemical Manufacturers ("AFPM") appreciates the opportunity to provide a 

statement for the record on the U.S. Trade Policy Agenda. AFPM is proud to represent 97 percent of the 

nation's refining and petrochemical manufacturing capacity, including 118 refineries and 248 

petrochemical manufacturing facilities. Our members are high-tech American manufacturers of virtually 

the entire U.S. supply of gasoline, diesel, jet fuel, other fuels and home heating oil, as well as t he 

petrochemicals used as building blocks for thousands of vital products in daily life. The refining and 

petrochemical industries support more t han 3 million U.S. jobs and add $568 billion each year to the 

U.S. economy. Our comments will focus on both global and North American trade. 

Free trade is a key element for continued growth in U.S. refining and petrochemical manufacturing. The 

U.S. imports significant volumes of crude oil from Canada and Mexico and exports substantial volumes 

of refined petroleum products and petrochemicals to those countries. In addition, w ith access to 

abundant feedstocks and the lifting of the export ban, U.S. global trade of natural gas, crude oil, and 

petrochemical product has increased drastically. 

As a result of the North American Free Trade Agreement ("NAFTA"), the U.S. enjoys reduced costs on 

imported energy products such as crude oil, as well as billions in annual export revenues. The growth of 

energy infrastructure such as cross-border pipelines from the U.S. into Canada and Mexico has allowed 

for expanded market access for U.S. companies, greater investment, job growth and affordable energy 

costs. 

Trade policies that could upend the existing integrated North American energy market could greatly 

increase the costs of U.S. imports of key energy products from Canada and Mexico, driving up energy 

costs for consumers and impacting job growth and investment. 

Additionally, broadly applied trade restrictions, such as the recently announced Section 232 steel tariffs 

under the 1962 Trade Expansion Act, could compromise the economic benefits of expanded market 

access the U.S. refining and petrochemical manufacturing industry has experienced under NAFTA. 

Increased costs on steel would significantly undermine the supply structure and potentially compromise 

AFPM member companies' oil and natural gas production, and the refining and transportation of energy 

to consumers, including the U.S. military. 

I. North American Trade in Energy and Petrochemicals Under NAFTA is Significant and Growing 

North American trade in energy and petrochemicals plays an integral role in securing and preserving 

energy security and economic growth for the United States as well as for our trading partners, Canada 

and Mexico. Bilateral energy trade between the United States, Canada and Mexico centers largely on 

crude oil, refined products, and natural gas. 
86 


33808A.048

~~!~~ Fuel& PetrOChemical M3111Jfacturers 

Cross-border trade of energy and petrochemical products between the United States, Mexico, and 

Canada has enhanced market access and bolstered the competitiveness of our domestic refining and 

petrochemical industries. Canada is the United States' largest energy trading partner and Mexico is the 

United States' second largest energy trading partner. 

Crude Oil. The North American supply of crude oil is vital for U.S. energy, economic, and national 

security. Canada and Mexico combined to supply 48 percent of the U.S. imported crude supply needs in 

2016. More specifically, in 2016, the U.S. imported 3.3 million barrels of Canadian crude oil per day, 

making Canada the largest supplier of imported crude oil to the U.S., representing 41 percent of U.S. 

crude oil imports. Similarly, the U.S. import ed 582,000 barrels of crude oil per day from Mexico, making 

Mexico the fourth largest source of imported crude oil, representing 7 percent of U.S. crude oil imports. 

Petroleum products. In 2016, the U.S. exported 4.7 million barrels per day of refined petroleum 

products, and one-third of those exports went to Canada and Mexico. Products include transportation 

fuels such as gasoline, diesel, and jet fuel, as well as heating oil, and other products such as naphtha, a 

petrochemical feedstock, propane that is used for heating and cooking, and light oils used to dilute 

heavy crude oils, which both Canada and Mexico produce. 

Both Canada and Mexico are vital markets for U.S. refined products. Mexico is the single largest export 

market for the U.S. refining industry; in 2016, almost 20 percent of U.S. petroleum product exports were 

delivered to Mexico. In fact, U.S. exports of gasoline to Mexico supplied more than half of Mexico's 

gasoline demand in 2016. 

Natural Gas. Natural Gas trade between the United States and canada is dominated by pipeline 

shipments. In 2016, natural gas imports from Canada averaged 8.0 billion cubic feet per day (Bcf/d) 

(equaling 97 percent of all U.S. natural gas imports), and U.S. natural gas exports to Canada averaged 2.1 

Bcf/d, (equaling 33 percent of all U.S. natural gas exports). 

Mexico is the U.S.'s largest recipient of natural gas exports. U.S. exports of natural gas to Mexico have 

increased dramatically as U.S. production of natural gas has increased. In 2016, U.S. exports of natural 

gas to Mexico totaled nearly 4 Bcf/d (equaling 60"~ of total U.S. natural gas exports) and are expected to 

increase in 2017 as pipeline infrastructure expands. Natural gas pipelines currently under construction 

or in the planning stages are expected to double the pipeline natural gas exporting capacity from the 

U.S. to Mexico in the coming years. The U.S imports very small volumes of natural gas from Mexico into 

Southern California and Texas. 

U.S. natural gas trade with Mexico and Canada is vitally important to balancing U.S. nat ural gas demand 

and supply. In 2016, the U.S. consumed more than 75 Bcf/day of natural gas, more than 10 percent of 

which was imported from Canada and Mexico. 

Petrochemicals. In total, trade in all chemicals, including substances outside of the petrochemical 

portfolio, many of which are made from petrochemical building blocks, has more than tripled over the 

last two decades since the enactment of NAFTA from $20 billion in 1994 to $63 billion in 2014. 

Petrochemical imports from Canada and Mexico totaled around $419 million in customs value, while 

exports to both countries totaled around $749 million in customs value. 

2 
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33808A.049

~~!~~ Fuel& PetrOChemical M3111Jfacturers 

II. North American Trade in Energy and Petrochemicals Enhances the Competitiveness of u.s. Fuel 

and Petrochemical Manufacturers 

North American energy trade has led to significant and innovative changes in the energy and 

petrochemical sectors of the U.S., Canada, and Mexico. Innovation and technology have increased crude 

oil production in the U.S., leading to t he lifting of the U.S. ban on crude oil exports in 2015. Likewise, in 

2013, Mexico changed its constitution to begin liberalizing its energy sector, allowing for direct 

investment by foreign companies for the first time. 

As a result of increased energy production and the increasingly integrated North American energy 

market, the International Energy Agency (lEA) now projects that North America will be energy secure by 

2020. North American energy security reduces U.S. reliance on unstable and volatile sources of energy, 

benefiting U.S. national security. Continued cross-border energy trade w ill only add to the increases in 

productivity and innovation that has played out the last two decades. 

With the liberalization of the Mexican energy sector, significant investments are now being directed 

from the U.S. into the Mexican energy infrastructure. For example, Andeavor, formerly Tesoro 

Corporation, was recently awarded a contract to lease storage and pipeline capacity in northwestern 

Mexico from Mexico's state·run oil and gas company Pemex. Andeavor w ill supply refined products 

produced from their U.S. West Coast refineries to consumers in Mexico, providing an important market 

for U.5.·produced refined products. 

Andeavor is currently the f irst company to integrate sales of U.S. manufactured fuel at U.S. branded 

(ARCO) stores in Mexico. Andeavor has seen sales volumes at these stores exceed expectations. By 

2020, Andeavor projects sales of 30,000 barrels per day in Baja California and Sonora, and the potential 

for an additional20,000 barrels of sales per day in Chihuahua, Sinaloa and Baja Sur. 

likewise, Valero Energy Corporation and Exxon Mobil recently announced hundreds of millions of 

dollars in investment in fuels logistics, product inventories, and marketing in Mexico. Exxon has said the 

company plans to invest $300 million over t he next decade and is opening the first series of Mobil-brand 

stations in Mexico this year. Similarly, BP launched its first Mexican service station in March of 2017 with 

plans to have 1,500 in operation over the next five years. 

In August, Valero Energy Corporation signed a long-term supply agreement with IENova to supply 

gasoline, diesel and jet fuel to terminals operated by IE Nova at the Port of Veracruz on the Gulf of 

Mexico and inland in Puebla and Mexico City. Supply to the terminal at the Port of Veracruz will begin in 

2018 with products moving inland by rail through a separate, long-term Valero agreement with rail 

operator Ferromax. The Puebla terminal and Mexico City terminal is scheduled to begin operating in 

early 2019. These investments w ill provide an important and growing market for U.S. refined products. 

Ill. Future Opportunities for Growth and Investment Presented by North American Trade in Energy 

and Petrochemicals 

In addition to the current economic benefits of cross-border energy trade, opportunities for sustained 

trade benefits as well as fut ure growth and investment between the United States, Canada and Mexico 

will continue. 

3 
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33808A.050

~~!~~ Fuel& PetrOChemical M3111Jfacturers 

Exports to Canada of natural gas and other refined products will remain strong thanks in part to 

invest ments in energy infrastructure, primarily cross-border pipelines. Additionally, Mexican demand for 

U.S. exports of natural gas has grown and is expected to continue trending upward through 2030. 

In Mexico nat ural gas is the country's largest source of electricity generation, accounting for 54 percent 

ofthe country's generation in 2015, up from 34 percent in 2005. According to Mexico's national energy 

minister {SENER), more t han 60% of Mexico's electri c capacity additions between 2016 and 2020 are 

projected to come from natural gas-fired power plant s, and significant natural gas capacity additions are 

expected to continue through 2029. SENER projects natural gas-fired capacity w ill account for 24.9 

gigawatts {GW) of total capacity additions from 2016 t o 2029, with 14.7 GW of new gas-fired capacity 

coming online by 2020. 

New natural-gas fired plants will increase Mexico's natural gas demand, specifically a projected increase 

from the power generation sector from 3.6 billion cubic feet per day {Bcf/d) in 2015 to 5.4 Bcf/d in 2029. 

This expected demand growth will be met primarily by increasing imports of natural gas from the United 

States and by large expansions of both cross-border U.S.-Mexico pipeline capacity and Mexico's 

domestic natural gas pipeline networks. 

In 2017 and 2018, natural gas pipelines currently under construction or in the planning stages are 

expected to nearly double the pipeline natural gas exporting capacity from the United States to Mexico. 

The expansion of U.S. pipeline export capacity to Mexico has been matched by a five-year plan to 

expand Mexico's domestic pipeline network, which includes 12 additional pipelines with a total capacity 

of 9. 7 Bcf/d currently in development. The plan will expand existing networks and add more than 3,200 

miles of new pipeline through Mexico that will create new markets for natural gas in currently supplyconstrained regions. 

IV. Broad Trade Restrictions, such as Tariffs on Steel, will have Detrimental Impacts on U.S. 

Manufacturing and Infrastructure, Energy Security and American Competit iveness. 

The recent ly announced tariffs on steel imports, under Section 232 of the 1962 Trade Expansion Act, 

could result in adverse economic impacts including loss of jobs, increased new construction costs, 

delayed or cancelled projects, delayed maintenance, and potential service disruptions. 

AFPM members own and operate pipeline infrastructure and rail tank cars that transport crude, gas, and 

petroleum products to and from their refineries and facilities. In recent years, approximately 77 percent 

of the steel used in line pipe was imported as there is currently limited domest ic production availability 

of the high-quality pipeline quality steel required under U.S. safety laws. Trade restrictions such as these 

would significantly undermine t hat supply structure of this important steel without viable alternatives 

and potentially lead to delay or canceled infrastructure projects. 

U.S. steel manufacturers have moved towards higher margin steels and away from high grade pipeline 

steels. As of March 30, 2017, there are 38 mills able to produce API Specification SL Line Pipe (the 

required standard) in the United States whereas there are 536 worldwide. The availability of multiple 

domestic and foreign sources of steel has provided supplies that have led to the United States becoming 

the world's largest producer of oil and natural gas. In 2017 alone, the oil and gas industry accounted far 

10 percent of steel demand. 

4 
89 


33808A.051

~~!~~ Fuel& PetrOChemical M3111Jfacturers 

While a steel tariff would likely positively impact the steel employment rates, it would be far off-set by 

losses in steel-using industries. Most recently the U.S. found this out in 2002 after former President 

George W. Bush imposed similar tariffs on imports of certain steel products. A 2003 study on the 

unintended consequences of the 2002 U.S. steel import tariffs found: 200,000 Americans lost their jobs 

to higher steel prices during 2002; more American workers lost their jobs in 2002 to higher steel prices 

than the total number employed by the U.S. steel industry itself; and every U.S. state experienced 

employment losses from higher steel cost, with some of the highest losses occurring in California 

(19,392), Texas (15,828), Ohio (10,553), Illinois (9,621) and Pennsylvania (8,400). 

Tariffs on steel imports could lead to potential trade retaliation and set a dangerous precedent for 

future trade policy. The U.S. trade deficit in goods and services was $566 billion last year, and in 

December widened to its highest since 2008. This deficit would have been much worse had we not seen 

the boom in U.S. energy production and significant gains in crude oil and petrochemical product exports. 

The U.S. trade deficit indicates the high level of exposure the U.S., and the energy industry, has to 

retaliatory policies that could be pursued by countries adversely affected by U.S. domestic content 

policies. 

Furthermore, following passage of the Tax Cuts and Jobs Act (H.R. 1}, a number of AFPM member 

companies have announced billions in investments to build out operations, production, and increase 

employment. However, such investments could be compromised as a result of increased construction 

and material costs that could result from tariffs on st eel imports. 

V. Recommendations 

An increasingly integrated North American energy market is a w in for the U.S. refining and 

petrochemical industries, the environment, and energy consumers. Strong trade relationships between 

the United States, Canada and Mexico have led to reduced costs on key imported energy products, 

robust export markets in Canada and Mexico, and expanded market access. This in t urn has allowed for 

greater industry investment and job growth, affordable energy costs and increased global 

competitiveness. 

AFPM appreciates the role North American free trade has played in fostering energy security, economic 

growth and American competitiveness, and support the continuation of NAFTA. As NAFTA negotiations 

continue in 2018, AFPM offers the following recommendations for modernizing the free trade 

agreement. 

NAFTA investment protections should be strengthened consistent w ith other U.S. free-trade 

agreements, or at the very least preserved. This specifically includes the Investor-State Dispute 

Settlement (ISDS) enforcement mechanism, which protects and promotes U.S. investments. 

AFPM also recommends that the U.S. support policies that enhance and modernize NAFTA, including 

those that streamline and modernize customs procedures to reflect the way modern energy and 

petrochemical trading moves across borders, and increase regulatory cooperation. 

Finally, AFPM recommends policies that help ensure we have modern and updated infrastructure in 

place to safely and efficiently move our products across the borders and further strengthen our 

integrated energy market s. AFPM strongly opposes a broad 25 percent steel tariff and recommends that 

5 
90 

f 


33808A.052

~~!~~ Fuel& PetrOChemical M3111Jfacturers 

the Department of Commerce implements a flexible and fair exclusion process from the steel tariffs that 

acknowledges the complex multi-modal supply chains of the U.S. energy sector. Any such exclusion 

process should recognize the need for specialty steel not available domestically. Broadly applied trade 

restrictions without a robust exclusion process would significantly undermine the supply structure, 

w ithout viable alternatives, and potentially lead to delay or canceled infrastructure projects that are 

essential for energy production, processing, refining, transportation, and distribution. 

Policies such as broadly appl ied trade restrictions like tariffs on steel imports are counterproductive to 

this goal and could have a regressive impact on the growth in market access and resulting economic 

benefits the U.S. fuel and petrochemical manufacturing industry has enjoyed under NAFTA. 

6 
91 


33808A.053

AJR.CONDiltONINQ, HEAT1NG, 

ll REFRIGERATION INSTITUTE 

we make life htoner"' 

March 20, 2018 

The Honorable Kevin Brady 

Chairman 

Ways and Means Committee 

U.S. House of Representatives 

Washington, D.C. 20515 

2111 Wilson Boulevard Suite 500 Arlington VA 22201-3001 USA 

Phone 703 524 8800 I Fax 703 562 1942 

www.ahrinet.org 

The Honorable Richard Neal 

Ranking Member 

Ways and Means Committee 

U.S. House of Representatives 

Washington, D.C. 20S15 

Dear Chairman and Ranking Member: 

On behalf of the Air-Conditioning, Heating, and Refrigeration Institute (AHRI) I am writing in 

reference to the committee hearing on Thursday, March 22, 2018 with Secretary of Commerce 

Wilbur Ross on trade matters within Commerce's purview, particularly the section 232 

determinations on steel and aluminum. AHRI is the trade association representing over 315 

manufacturers of residential, commercial, and industrial air conditioning, space heating, water 

heating, and commercial refrigeration equipment and components for sale in North America 

and around t he world. The heating, ventilation, air-conditioning, refrigeration (HVACR), and 

water heating industry employs 1.3 million people and generates $257 billion in economic 

activity annually. 

Please find attached AHRI's previous comments regarding the Section 232 investigation for the 

impact of steel imports on national security. 

Please do not hesitate to contact me if you have any questions. 

Sincerely, 

Joe Trauger 

AHRI Senior Vice President 

Policy and Government Relations 
92 


33808A.054

July 17, 2017 

The Honorable Wilbur Ross 

Secretary, Department of Commerce 

140 1 Constitution Avenue, NW 

Washington, D.C. 20230 

Dear Secretary Ross: 

On behalf of the Air-Conditioning, Heating, and Refrigeration Institute (AHRl), I am writing to 

express concems about the Section 232 investigation into the impact of steel imports on national 

security. 

AHRl is the trade association representing manufacturers of residential, commercial, and 

industrial air conditioning, space heating, water heating, and commercial refrigeration equipment 

and components for sale in North America and around the world. The heating, ventilation, airconditioning, refrigeration (HV ACR), and water heater industry is responsible for nearly I .3 

million j obs in the United States and represents roughly $79 billion in wages for American 

workers. 

Steel and alwninum are essential components in the manufacturing of HV ACR and water 

heating equipment. The imposition of additional tariffs on steel beyond existing anti-dumping 

and countervailing duties is very likely to have a negative impact on the industry, its employees, 

and the consumers who buy its products. To provide you with some context of how important 

these materials are to the industry, below are several examples of our members' products made 

using aluminum and steel that will be directly impacted by any increases in the cost of those 

materials. 

Water-cooled chiller - Up to 8 tons of steel per unit 

Residential air-conditioning system - 80+ pounds of steel depending on size (7 .3 million units 

20 16) 

Residential water beater - I 00+ pounds of steel per unit (8.3 million units 20 16) 

Commercial boilers - I. 75 to 30 tons of steel per unit depending on size 

Therefore, increasing the cost of steel and aluminum are of great consequence to the HV ACR 

and water heating industry and its consumers. We appreciate your consideration of those 

consequences as you make your recommendations in concluding the Section 232 investigation. 

Please do not hesitate to reach out should you have any questions. 

Sincerely

~ 

, 

Stephen Yurek 

President and CEO 
93 


33808A.055

February 22, 2018 

The Honorable Mitch McConnell 

Majority Leader 

United States Senate 

Washington, D.C. 20510 

The Honorable Paul Ryan 

Speaker of the House 

United States House of Representatives 

Washington, D.C. 20515 

On behalf of the Air-Conditioning, Heating, and Refrigeration Institute (AHRI), I am writing to express our 

industry's concerns about potential actions resulting from the Section 232 investigation reports on steel 

and aluminum imports that would be detrimental to our members. We urge you to let the 

Administration know you share our concerns about the consequences additional tariffs will have on our 

economy. 

AHRI is the trade association representing manufacturers of residential, commercial, and industrial air 

conditioning, space heating, water heating, and commercial refrigeration equipment and components 

for sale in North America and around the world. The heating, ventilation, air-conditioning, refrigeration 

(HVACR), and water heat ing industry is responsible for nearly 1.3 million jobs in the United States and 

generates roughly $257 billion in economic activity annually. 

Steel and aluminum are essential components in t he manufacturing of HVACR and water heating 

equipment. The imposition of additional tariffs on these materials beyond existing anti-dumping and 

countervailing duties is very likely to have a negative impact on the industry, its employees, and the 

consumers who buy its products by reducing the global competitiveness of manufacturers in the U.S. 

and threatening jobs. 

To provide you w ith some context of how important these materials are to the industry, below are 

several examples of the amount of steel used in our members' products that will be directly impacted by 

any increases in t he cost of those materials. 

Water-cooled chiller- Up to 8 tons of steel per unit 

Residential air-conditioning system - 80+ pounds of steel depending on size (7.3 million units 

2016) 

Residential water heater - 100+ pounds of steel per unit (8.3 million units 2016) 

Commercial boilers -1.75 to 30 tons of steel per unit depending on size 

Using 2016 sales figures for residential air-conditioning and water heating systems noted above, those 

two products account for over 700,000 tons of steel annually. Clearly, any increase in cost or disrupt ion 

in the supply of these materials will have a significant impact on the cost and delivery of these products 

to consumers in the residential market. 

AHRI and its member companies would like to thank you for your leadership in making manufacturers 

more globally competitive through efforts like tax and regulatory reform, and would greatly appreciate 

your continued support in urging the Administration to consider the detrimental economic impacts 

addit ional t ariffs would have on American manufacturing. 
94 


33808A.056

Joe Trauger 

AHRI Senior Vice President Policy 

an<! Go~.emment Relations 

Cc: Senator John Cornyn 

Senator Orrin Hatch 

Senator Roy Blunt 

Senator John Thune 

Majority leader Kevin McCarthy 

Majority Whip Steve Scalise 

Representative Cathy McMorris-Rodgers 

Representative Patrick McHenry 

Representative Kevin Brady 
95 


33808A.057

February 27, 2018 

The President 

The White House 

1600 Pennsylvania Avenue, NW 

Washington, DC 20500 

Dear Mr. President: 

As representatives of thousands of businesses across the United States, we are concerned with the 

recent ly released reports by the Department of Commerce entitled "The Effects of Imports of Steel on 

the National Security'' and "The Effects of lmport.s of Aluminum on the National Security" (collectively, 

the Reports). 

After reviewing the Reports, our industries are worried that all of the remedies recommended are 

overly-broad and will have severe detrimental impact on downstream users of steel and aluminum. We 

understand your goal of supporting these two important sectors of our domestic manufacturing base. 

However, it is our belief that global tariffs and quotas on imports of these products will injure the 

purchasers of these products and will lead to the loss of thousands of American jobs. Trade restrictions 

of this nature and magnitude will therefore lead to more downstream steel and aluminum-containing 

products being imported into the U.S. Historical and current data shows that the remedies prescribed in 

the Reports will significantly raise input costs for industries that use these products. Further, as steel and 

aluminum costs continue to rise and availability decreases, it will impede the ability of downstream 

manufacturers and the suppliers and retailers reliant upon them to reinvest in innovation and their 

workforce. Finally, actions of this type will inevitably result in trade retaliation by our trading partners, 

and such retaliation will likely target U.S. exports abroad, including manufacturers, agricultural and 

commodity exporters and even our services industries. 

Thank you for your efforts to support manufacturing in America. The U.S. economy is starting to see the 

benefits of the Administration's tax reform and regulatory agenda. However, we believe that all options 

provided in the Reports will significantly curtail job growth for downstream users, which are 

cumulatively far larger in term s of employment than steel and aluminum. Such trade measures will 

serve as a drag on overall U.S. economic growth and far outweigh any benefit to steel and aluminum 

producers. We urge you instead to look for better solutions to legitimate concerns about global trade in 

these products that will benefit both producers and users. 

Sincerely, 

Air ..Conditioning, Heating, and Refrigeration Institute 

Alliance of Automobile Manufacturers 

American Chemistry Council 

American Petroleum Inst itute 

American Soybean Association 

American Supply Association 

Association of Equipment Manufacturers 

Association of Global Automakers 

Can Manufacturers Institute 

Grocery Manufacturers Association 

Industrial Fasteners Institute 
96 

f 


33808A.058

Midwest Food Processors Association 

Motor & Equipment Manufacturers Associat ion 

National Council of Farmer Cooperatives 

National Electrical Manufacturers Association 

National Foreign Trade Council 

National Pork Producers Council 

National Tooling and Machining Association 

Outdoor Power Equipment Institute, Inc. 

Pet Food Instit ute 

Precision Machined Products Association 

Precision Metalforming Association 

Shelf-Stable Food Processors Association 

Truck & Engine Manufacturers Association 

U.S. Wheat Associates 

Cc. 

The Honorable Robert Lighthizer, United Stat es Trade Representative 

The Honorable Wilbur Ross, The Secretary of the Department of Commerce of the 

United States The Honorable Gary Cohn, Director of the National Economic 

Council 
97 


33808A.059

Testimony on behalf of Amgrapb Packaging, Inc. 

Before the Committee on Ways and Means 

U.S. House of Rept·esentatives 

April4, 2018 

Hello and thank you for the opportunity to testify before the House Ways & Means Committee in 

response to President Trump's Section 232 tariffs on Aluminum. My name is Michael Higgins, 

and I am the Chief Operating Officer at Amgraph Packaging. Amgraph is a producer of flexible 

packaging, with a focus on sustainability, supplying food and phannaceutical packaging to many 

well-known name brands. We are a family owned - family run business that employs about one 

hundred and ten hardworking Americans in our facilities along the east coast. 

I am here to provide you with the perspective of someone who relies on imported aluminum foil 

to produce finished goods in the United States. A significant portion of our business is the 

conversion of aluminum foil into flexible packaging largely for food packaging and similar 

applications. Aluminum foil provides superior moisture and oxygen barrier properties and is 

preferred for our production process. Imported foil, especially from China, is crucial to our 

production process and interruptions in supply have proven extremely difficult to replace. I want 

to stress at the outset that when I say "extremely difficult to replace," I'm not referring sin1ply to 

monetary considerations. The United States aluminum industry cannot provide the quality, gauge 

or quantity that my company and other flexible packaging manufacturers require to make a 

satisfactory product. 

These tariffs have rendered Chinese aluminum foil unavailable, due to significant increase in cost. 

Since I will not be able to source the inputs I need in the United States, I will have to tum to 

alternative sources abroad from Korea, Indonesia or Europe, at an increased cost from what we 

were previously paying for foil. To maintain the stability of my Company I will try to pass on the 

increased costs to my customers. Increasing cost is not an ideal solution long tenn as it wiJI impact 

our competitivene-ss in both global and domestic markets. 

Our reliance on imported foi I is driven by two primary concerns, ac.cess to adequate supply and 

quality. Seventy-eight percent of the foil my company purchases is .0003" ("ultra-thin") and 

below. We cannot source commercial volumes at that gauge of material in the United States. Only 

one mill in the United States can produce ultra-thin foil, however that tnill cannot meet our supply 

demands. The remaining twenty-two percent of the foil we purchase ranges between .0007" to 

.001" gauges. We have attempted to source these gauges domestically but the quality of the 

product has been terrible. At one point we were rejecting one out of every two loads of foil from 

domestic producers in the triple .0007" gauge range. We have been in this business a very long 

time and know that that thickness should be relatively easy to produce, but the poor quality 

remained consistent and forced us, at great cost, to air freight foil from China to meet our 

production commitments. By contrast, over the past twelve years, with imports of fifteen million 

pounds, we have bad zero defects from Chinese product - zero. Also significant, it is zero defects 

in the gauges that are more difficult to produce. 

To provide you with a separate example, a domestic producer supplied my company with product, 

in the .0007" gauge range, that contained a surface contamination that ultimately resulted in a loss 
98 

f 


33808A.060

for Amgraph of approximately $200,000. We had a third party examine the issue and identify 

deficiencies at our foil supplier's mill. When we contacted the mill to discuss how we might remedy 

the situation, they told us that the product met the alloy specifications in the contract, and in their 

eyes that was all they were required to do. This example is one of many and highlights why my 

company is unwilling to trust or take a chance on United States Aluminum mills capable of 

producing foil in the gauges we require. I simply cannot rely on supply from domestic producers 

who cultivate the perception that they are unwilling to deliver a quality product to the market. 

These are two sensational examples of problems with domestic supply. Day to day quality issues 

like tears during conversion result in extended periods of machine down time and costly cleanup. 

When we are laminating plastic to foil and the foil tears, molten plastic adheres to machine 

components rather than the foil. This results in down time and lost material, and often damage to 

our equipment requiring repair or replacement. Poor quality is costly. 

To the extent that the domestic aluminum manufacturers are suffering, it is in my opinion that it is 

a failure on their part to invest the necessary capital to produce product of sufficient quality to 

meet the needs of United States customers. Under-investment has been prevalent for 10 years, and 

the suggestion that unfairly priced imports are the cause of the industry's woes strikes me as 

opportunistic. 

Ultimately these tariffs will operate to protect one industry at the cost of many others. The flexible 

packaging industry alone directly employs 80,000 people and contributes approximately 30 billion 

dollars to the United States economy. Our industry consists of 4 19 companies in 45 states, and 

indirectly supports over 230,000 jobs nation-wide. We are a vibrant and growing segment of the 

American manufacturing economy. Access to raw materials is crucial, given the prevalence of 

that cost in the production process. Our industry provides goods that are essential to food supply 

chains and the pharmaceutical sector. Due to limited supply and inferior quality in the domestic 

industry my company will be compelled to continue to source overseas, often at a higher cost than 

a year ago. 

Let me be honest with you. I would love nothing more than to buy American products for our foil 

requirements. I am a two-time combat veteran who has faith in the fun1re of manufacn1ring in this 

country. These tariffs will no! incentivize my company to purchase foil domestically. Instead, 

these tariffs jeopardize both my ability to compete against foreign packaging importers and my 

industry's ability to grow, thrive and contribute to the health of the domestic economy. 

Thank you. 
99 


33808A.061

Donald B. Cameron, Jr. 

202·216-4811 

dcameron@mmmlaw.com 

_, mmmlaw com 

R. Will Plonert 

202·216-4819 

wplanert@mmmlaw.com 

www.mmmlaw.com 

VIA EMAIL 

Chairman Kevin Brady 

MORRIS, 

MA.'I)IINO& 

MAATIN. u.r 

March 21, 2018 

United States House Committee on Ways and Means 

1102 Longwo rth HOB 

Washington, DC 20515 

\\aysandmcans.submi•sions'li'mail.hn••sc.gov 

Julie C. Mendota 

202-216-4817 

jrnendoza@tnmmlaw.com 

www.mmmlaw.com 

BtadyW. Mlns 

202·216-4116 

com 

WONN,mmmlaw.com 

William H. Barringer 

202·216-4108 

wbarringer@mmmlaw.com 

WONN.mmmlaw.com 

Rc: Section 232 Duty on Steel Imports- Product Exemption for Grade 1078 and 

Above Wire Rod for Tire Cord 

Dear Chairman Brady, 

This Jcucr is filed on behalf of Bckacrt Corporation, Kiswire America, and Tokusen USA 

concerning the issue of I 078 and above wire rod for tire cord (imported under ~ITS 

7213.91.30.11) and the Section 232 duty on steel imports. Stated simply, U.S. wire rod 

producers arc incapable of producing 1078 and above grade wire rod to produce tire cord 

because that grade of wire rod must be produced in blast furnaces to achieve the strength 

cleanliness and other properties necessary to draw the wire rod to tire cord dimensions. All three 

of our companies produce tire cord in the United States for U.S. tire manufacturers- but without 

access to imported wire rod of grade 1078 and above, our mills \\~11 not be able to produoe tire 

cord and they will be shut down. Indeed, because of the anticipated 232 duties, these companies 

irave cut back on expansion plans and, in one case, already closed an ope rating facility resulting 

in lost jobs to U.S. workers. 

The U.S. Department of Commerce acknowledged this problem with respect to tire cord. 

In its discussion of the difference between Electric Are and Basic Oxygen Furnace production in 

Phone. 202 408.5t53 I v.ww.mmmlaw.oom 1401 Eye SVOOL NW I Suile 600 I Washington. DC~ 

~aflla • Washington. DC • Ra!e91-CMflam • Savamah 

ln~~-..g~ 8eojing 
100 


33808A.062

MORRIS, MANNINO & MARTIN, LLP 

Chairman Brady 

March 21,2018 

Pagc2 

the 232 Report, the Commerce Department stated as foUows with respect to high carbon wire rod 

required to produce tire cord: 

A further reduction in domestic basic oxygen furnace capacity would put the United 

States at serious risk of becoming dependent on foreign steel to support its critical 

industries and defense needs . ... This is not a hypothetical situation. The Department of 

Defense already finds itself without domestic suppliers for some particular types of steel 

used in defense products, including tire rod steel used in military vehicles and 

trucks." 

The Effects of Imports of Steel o11the National Security, U.S. Dep't of Commerce (Jan. II, 20 18) 

(hereinafter "Sect/011232 Report'') at45-46 (emphasis added) (citation omitted). 

This was also testified to by Tracey J. Norberg, Senior Vice President and General Counsel of 

the U.S. Tire Manufacturers Association. Section 232 Report at Appendix F, pp 96-99. Yet no 

product exclusions were announced with the Proclamation. 

Inexplicably, the Administrotion's approach bas been to exclude tire cord from the 

Section 232 duties, but not the "~re rod used to produce tire cord. This, despite the fact that 

there is extensive U.S. production of tire cord, but there is virtually no domestic production of 

1078 and above wire rod, meaning that domestic tire cord manufacturers are dependent on 

importing wire rod as the feed stock for their production. This perverse policy virtUally 

guarantees the disappearance of most, if not all, U.S. tine cord capacity as the U.S. tine cord 

producers must pay a 25% duty on their imports of ~re rod needed to produce tire cord in the 

United States while tire cord produced outside the United States continues to enter free of 

Section 232 duties. Thus, good high paying U.S. jobs in the tire cord industry will be 

eliminated, while all of this production will be transferred to overseas manufacturers.• At the 

same time, the U.S. tire manufacturers will become more dependent on importS of tine cord for 

1 A list of affected production facilities and U.S. manufacturing jobs is attached. 
101 


33808A.063

MORRI~, MANNING & MARTIN, L LP 

Chairman Brady 

March 21 , 2018 

Page 3 

manufacturing tires. including those used in national defense applications, such as tires for 

military aircraft. These conscqueooes are all the exact the~ of the President's objective in 

imposing the Section 232 duties. U.S. jobs will be lost, not created, foreign suppliers will gain a 

competitive advantage in supplying the U.S. tire market, and the production of important 

national defense products will become more dependent on imports. 

We understand that the U.S. Department of Commerce bas established an exemption 

process for dealing with short supply issues. That process, however, is not a sufficient remedy 

fvt lddressing the perverse incentives that have been created in this instance - where U.S. 

producers of tire cord must pay Section 232 duties on wire rod that is not available from U.S. 

producers while their foreign competitors already have an exclusion from Section 232 duties. 

Simply put, the U.S. tire cord producers cannot afford to wait 90 days or longer for relief from 

this disastrous policy inversion. As mentioned above, one U.S. producer has already idled 

production due to the Section 232 duties. In addition, because exclusions must be renewed 

annually, the U.S. tire cord producers will be reluctant to make long tenn investments when a 

supply of feedstock is only guaranteed shon terrn. 

In view of the tbese facts, urgent, expedited action is needed to put U.S. tire cord 

producers on a level playing field with their foreign competitors by providing an immediate, 

pemmnent exclusion from Section 232 duties for I 078 and above grade wire rod used to produce 

tire cord in the United States. 

This 232 process is been flawed from conception, and in the case of tire cord and wire 

rod used to produce tire cord, the process is deteriorated even further. 
102 


33808A.064

MORRIS, MANNINO & MARTIN, LLP 

Chairman Brady 

March 21 , 20 18 

Pagc4 

Please contact the undersigned if you have any questions regarding this maner. 

ual06J ... , 

:rr;::::e--

Donald B. Cameron 

Julie C. Mendoza 

R. Will Plancrl 

William H. Barringer 
103 

f 


33808A.065

ATTACHMENT 

List of Affected Productlo.n Facilities and U.S. Manufacturing .Jobs 

Bekaert Comoration 

Bekaert operates five plants in North America. The two largest plants are in Rogers and Van 

Buren, AR employing nearly 900 workers. 

The tire manufacturers have been or are in the process of investing $6 billion in new capacity in 

North America, particularly in the US. An unstable trade environment does not attract 

investment. On the contrarY, Bckaert Rogers was planning a $29 MIO expansion that would have 

increased tire cord production capacily by 50% and add over I 00 new jobs. This project was put 

on hold when the Section 232 investigation was initiated. 

Ki.swire America 

Kiswire America has two steel cord plants in the United States. The plant in Pine Bluff, Arkansas 

employs 320 employees and has 35,000 MT annual capacity. The plant in NewbefrY, South 

Carolina employs around I 50 employees and has 15,000 MT annual capacity. 'The Newberry 

plant was going to expand to 35,000 MT capacity and employ an additional 150 employees, but 

those plans are now cancelled due to the section 232 duty. 

Tokuscn USA 

Tokuscn USA's plant is located in Conway, AR, employs 330 employees, and has 40,000 MT 

annual capacily. 

11SI7106v1 
104 


33808A.066

lntJ·oduction 

U.S. House of Representatives 

Committee on Ways and Means 

Hea1·ing with Commerce Secretary Ross 

Ma•·cb 22, 2018 

Bemis Company, Inc. ("Bemis"), a manufacturer of packaging headquartered in Neenah, 

Wisconsin, bas concerns about the negative consequences that will result from additional tariffs 

being placed on imports of aluminum foil used for flexible packaging. Bemis believes that 

aluminum foil used in manufacturing flexible packaging in the United States (specifically, 

7607.1 1.30, 7607.11.60, 7607. 11 .90, and especially 7607.19.60 of the Hannonized Tariff 

Schedule of the United States) should be excluded from the Section 232 tariffs to avoid a 

punitive impact on this U.S. industry. Based on the March 15, 2018 ITC ruling, aluminum foil 

imports from China are already subject to AD and CVD duties ranging from 55.13-126.07%. 

Additional tariffs on aluminum foil, and especially the ultra-thin foi l used in flexible packaging, 

will negatively affect our business in the United States, given that (I) there is not adequate 

capacity in the United States to meet our quantitative and qualitative needs, and (2) our products 

compete with imported packaging that would not be covered by any measure impacting foil 

imports. Accordingly, Bemis respectfully submits that aluminum foil should be excluded from 

all actions resulting from the Section 232 investigation of national security effects of aluminum 

imports. 

Bemis, its products a nd its emplovment 

Bemis manufacturers packaging for the largest food, consumer products, and medical device 

companies in the world. Though we are not a household name, our products are found in 

virtually every aisle of the grocery store. Our products keep the food you buy safe and fresh 

through distribution and keep patients safe during surgery. At year-end 2017 Bemis had 57 

facilities in 12 countries and aboutl6,500 employees worldwide. Within the United States, 

Bemis bad 31 manufacturing plants in 14 states and almost 9,000 employees, 5,000 of those in 

Wisconsin. The states with the largest number of Bemis employees are Wisconsin, Indiana, Ohio 

and Pennsylvania. 

As a core part of its packaging business, Bemis uses aluminum toil as a barrier to light, oxygen, 

moisture, and bacteria to protect the food and med.ical supplies that go into our packaging. 

Without aluminum foil, many food and medical products would be less safe and subject to higher 

waste through distribution. While Bemis sources a significant percentage of its aluminum foil in 

the United States, there is only one domestic producer of foil for flexible packaging, and that 

firm's entire capacity is not enough to supply Bemis' annual requirements. 

A large portion of Bemis' foil requirements are for ultra-thin foil in gauges less than 0.0003 

inches thick. Such ultra-thin foil is used for applications such as ketchup packets, cream cheese 

packaging, powdered food and beverages, and med.ical device packages. We source tbe majority 

of our thicker foil requirements domestically, but nmst import the majority of our foil below 

0.0003" because domestic equipment supplying the packaging market, dating to the 1970's and 
105 

f 


33808A.067

earlier, is incapable of efficiently producing the quality we require for ultra-thin foil. We are 

unable to use the thinner gauges from domestic suppliers on our newer, high speed equipment 

because it results in high waste, reduced efficiencies, significant downtime, and unacceptable 

quality. As such, Bemis has been required to source this key material from offshore suppliers. 

Restricting impor·ts will negatively impact U.S. jobs and incr·ease pr·ices to consumer·s 

As previously mentioned, we are already facing duties on aluminum foil imports from China 

ranging from 55.13-126.07%. Adding an additional 10% tariff on top will only further increase 

costs and will not change the amount of aluminum foil that is imported from China. Bemis 

cannot absorb these increased costs from tariffs and duties and has no choice but to pass them on 

to our customers who will ultimately pass them on to consumers. 

Bemis understands the importance of, and fully supports protecting U.S. manufacturing jobs. The 

U.S. flexible packaging industry is a $30 billion industry employing an estimated 80,000 U.S. 

workers. However, many of Bemis' aluminum foil containing products compete with suppliers 

of packaging from outside the U.S. The higher costs resulting from tariffs and duties on 

aluminum foil could open the door to imports of packaging or finished products that don't face 

the same tariffs and duties resulting in a potential loss of market share for Bemis, other domestic 

packaging producers, or our customers, and potentially lead to lower employment. 

During the AD/CVD hearings on imports of Chinese foil, domestic foil producers stated that 

tbey bad idle capacity available and could create j obs if only they didn't have to compete with 

low priced imports from China. CVD have been in place since August 2017, and AD since 

November 2017, and despite the foil producer's assertions that they have idle capacity ready to 

serve, no new capacity has been made available to the packaging industry. Over the past six 

months the lone domestic supplier of foil for flexible packaging has increased its prices, 

extended its lead-times, and limited the amount of foi l available to its customers. We have no 

choice but to pursue alternatives to Chinese foil from outside the U.S. 

Finally, packaging foil is not made from military grade, high purity a luminum. We are not 

aware of any significant defense production needs for aluminum packaging foil. We respectfully 

submit that the Section 232 tariffs should not apply to imports of aluminum foil for packaging as 

the result will be grave consequences to the domestic manufacturing faci lities of Bemis, other 

packaging producers, and our customers with no increase in defense security. 

Respectfully submitted, 

Bemis Company, Inc. 

2301 Industrial Dr, PO Box 669 

Neenah, Wl 54956 

www.bemis.com 
106 

f 


33808A.068

Tom Salmon 

CEO 

Berry Global, Inc. 

101 Oakley Street 

Evansville, IN 47710 

Tel. 812-424-2904 

Fax. 812-250-0813 

Letter for the Record of the U.S. House ofRepresentatives Committee on Ways and Means 

Hearing on Trade Matters within the Department of Commerce's purview. 

Berry Global, Inc. ("Berry") is writing to express our concerns about the recently imposed 

Section 232 tariffs on aluminum foil. Berry uses significant amounts of ultra-thin gauge 

aluminum foil and is being negatively affected by the imposition of the Section 232 tariffs. 

The tariffs being imposed under Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. 

§ 1862) arc intended to support domestic production of items to address national security 

conccms. Wllile we believe national security should remain a priority, these tariffs are being 

implemented in a haphazard and chaotic manner, which is further complicated by the application 

of multiple exemptions. This diminishes the intent and makes these tariffs in effect a 

misappropriated tool to negotiate trade concerns, specifically with China, who is not a key 

supplier of aluminum or steel to the U.S. 

While Berry supports efforts to protect U.S. jobs and U.S. national security, we believe that such 

measures must consider the impact upon all sectors of U.S. industry and be limited in scope to 

address their specific objectives. 

Berry is a large user of aluminum foil in many of its products, including adhesive tapes, food 

packaging, and pharmaceutical packaging closure systems. The aluminum products for which 

there is limited or non-existent US production have been included in the scope of the Section 232 

action. Ultra-thin foil, which accounted for less than one percent of all US producers' shipments 

in 2016 and is a key manufacturing input for Berry, is subject to these tariffs. We are unable to 

identify and secure sufficient supply for this product in the US and are therefore being forced to 

import ultra-thin foils at an arbitrarily higher price due to the Section 232 tariffs. 

Any trade action taken in the name of protecting U.S. national security should have considered 

the breadth of its impact. Aluminum foil imports necessary for the packaging industry but 

without application in the national defense industry should be excluded from the scope of the 

Section 232 action. 

Berry and the Flexible Packaging Association, a trade organization representing Berry and other 

flexible packaging companies, share the same goal as the domestic aluminum producers, that of 

more American jobs. However, we cannot support trade actions that do not positively influence 

both the U.S. aluminum manufacturers and the $30 billion U.S. flexible packaging industry 

which employs 80,000 workers. We believe that all U.S. industry wins where there is fair trade 

and we support finding ways to work together to improve our country's competitiveness. 
107 


33808A.069

epic.org 

March 20, 2018 

Electronic Privacy Informati on Center 

1718 Connecticut Avenue NW. Suite 200 

washington. DC 20009. USA 

The Honorable John Culberson, Chairman 

The Honorable Jose Serrano, Ranking Member 

U.S. House Committee on Appropriations 

Subcommittee on Conunerce, Justice, Science, and Related Agencies 

H-305. The Capitol 

Washington, DC 20515 

Dear Chainnan Culberson and Ranking Member Serrano: 

'- +1 202 4831140 

eo •1 202 483 t24s 

'JI @EPICPrlvacy 

(t https://epic.org 

We write to you regarding I he FY 19 Budget Hearing for the Department of Conunerce' and 

I he c1'itical issue of pdvacy protection, perhaps the most important issue that the Secretary of 

Conm1erce will confront over the next several years. 

EPIC is a public interest research center established iJl 1994 to focus public attention on 

emerging pt·ivacy and c ivil liberties issues' EPIC is a leading advocate for consmne1· privacy and 

has appeared before this Committee on several occasions, and has actively participated in the 

proceedings of tl1e Federal Trade Commission ("FTC") and the Federal Conuntulicatious 

Commission (''FCC").' 

American cousm11ers face tmprecedented pdvacy and secm'ity challenges. Tile tultegulated 

collection of personal data bas led to staggedng increases in identity t11eft, security breaches. and 

financial fraud in the United States• The recent Equifax data breach that exposed the pe1·sonal 

information of more than 145 million Americans is !he latest in a growing number of high-profile 

hacks that threatenlhe ptivacy, security, and financial stability of Amedcan consumers. Far roo 

many organizations collect, use. and disclose detailed personal infOtlUalion with too little regard for 

the consequences. 

'FY/9 8ut(ger Het~ring- DeJXInmem of Commerce, 115'' Cong. (2018), H. Comm. on Appropria1ions, 

SubcoUllll. on Couuueroe, Justice, Science, and Related Agencies, 

hnps:l/appropriatious.house.gov calendar evemsiugle.aspx?EventiD 395 3l (Mar. 20, 20 18). 2 See EPIC, Abom EPIC, hllps://epic.orsfepic/about.html. 

' See. e.g, Marc Roteuberg, EPIC Executive Director, Tes1imony before the U.S. Senate Conmlittce on 

Commerce, Science, and Transpot1atioo. Commerce Conmlinee, Imemer Privacy and Profiling (June 13. 

2000), hllps://epic.orsfprivacy/inlemetlsenate-testimony.hlml; Letter from EPIC to the U.S. Senate 

Committee on Conunerce, Science, and Transportation on Oversight of the FTC (Sept 26, 2016), 

bnps:l/epic.orsfprivacy/consmner!EPIC-Letter-Seu·Connn·CST-FTC-Oversightpdf: Lener from EPIC to the 

U.S. House of Representatives Couuniuee on Energy and Commerce on FCC Privacy Rules (June 13, 20 16), 

bups://epic.orsfprivacy/consumer!EPIC-FCC-Ptivacy-Ru.les.pdf. 

' Fed. Trnde Comm'o. Consumer Seminel Network Dora Book (Feb. 20 16), 

bttps://www.ftc.gov/systemlfilesldocumentslrepo•1slconsumcr-scminel-octwork-data·book-january-december20 15/ l60229csn-20 l5dalabook.pdf. 

EPIC Statement 

House Appropi'iations Committee 

FY19 Budget - Dept. ofConuuerce 

March 20, 2018 

Privacy is a Fundamental Right. 
108 


33808A.070

Secretary Ross must back strong privacy safeguards for Ame1ican consumers. At tltis time, 

the FTC is simply not doing enougb to safeguard the personal data of American consumers. The 

FTC's privacy framework - based largely on "notice and choice"- is sin1ply not working. Research 

shows that consmncrs rarely read privacy policies; when they do, Ihese complex legal docmnents arc 

difficult to understand. And companies remain free to changes the tCOJIS and conditions whenever 

they wish. Nor can industry self-regulatory programs provide meaningthl privacy protections 

without enforceable legal standards. 

Even when the FTC reaches a cotlSent agreement with a privacy-violating company, the 

Conunission rarely enforces the Consent Order tenus.s Jl\St t.his week, we learned that the FTC's 

failm·e to enforce a 20 II CotlSent Order with Facebook has resulted in the unlawful tratlSfer of 50 

million Faoebook user records to a controversial data mining fum to influence the 2016 U.S. 

presidential election.' The 2011 Facebook Order was the result of an extensive complaint filed by 

EPIC and a coalition of consumer organizations in 2009, following Facebook's repeated changes to 

its p1ivacy settings that oveiTode user preferences and allowed third pru1ies to access private 

infonnation without users' consent.' The FTC bas an obligation to the American public to ensme 

that companies comply witl1 ex.isting Consent Orders. It is unconscionable that tl1e FTC allowed tllis 

tmprecedented disclosure of Americans' personal data to occur. The FTC's fai lure to act imperils not 

only privacy btu democracy as well. 

EPIC bas a.lso repeatedly warned the FTC that it bas an affinnative duty to tmdenake a 

review of substruJtial changes in business practices of a company subject to a consent order U1at 

implicates the privacy of Intemct users• The FTC's apparent failure to pursue such review has led to 

a downward spiral in the protection for Americru1 COilSUmers. 

The FCC must also do more to safeguard Ame.ricrut consumers. Last year, in the com ext of a 

public rulemaking, EPIC urged the FCC to adopt comprehensive privacy ntles that would apply to 

both Internet Se1vice Providers ("ISPs") and so-caUed "edge" providers, such as Google and 

Facebook, that donlinate much of the IJtteruet economy.9 However, tlte FCC adopted a modest rule 

that only applied to ISPs and that rule was subsequently repealed by Congress, with the support of 

the current FCC CbaiOJ1an Ajit Pai. l!lStead of moving forward to safeguard consmners, the FCC is 

moving bacl,-wards, leaving users of new coiJl.lnurtications services exposed to unprecedented levels 

of identity thefl, flnancial fraud, and security breaches. 10 

' See EPIC v. FTC. No. 12-206 (D.C. Cir. Feb. 8, 2012). 6 Craig Timberg, et al., U.S. and European Officials Question Facebook 's Protection of Personal Data, 

Washington Post. (Mar. 18. 2018), https:l/www.washingtonpost.comlbusinessleconomyltL,-and-enropeanofficials=CJnestion-facebooks-protection-of-personal-data/20 18/03/18/. 1 EPIC, et ai, In the MatterofFacebook, Inc. (Complaint, Request for Investigation, Injmtction, and Other 

Relief) (Dec. 17, 2009), hups:l/epic.org/privacy/inrefacebook/EPIC -FacebookComplaint.)>!lf. 

• Letter to Acting FTC Chait Maw-cen Ohlbausen, "FTC 2017: 10 Steps for Protecting CollSUmers, Promoting 

Competition and Innovation" (Feb. 15, 20 17) (" /. The FTC Must Enforce Existing Consem Orders 'J, bttps://epic.orglprivacy/iotemetlftc/EPIC-et-al-Itr-FTC-02-15-20 17 .pdf 9 EPIC Statement, FCC Overreach: £yamining the Proposed Privacy Rules, bearing before the House 

Commiltee on Energy and Connuerce, Subcommittee on Co01Dlmtications and Technology. Jun. 13. 2016. 1

° Federal Trade Comm'n, Consumer Sentinel Nerwork Data Book, Mar. 2017, bttps://www.ftc.gov/system/files/documentslrepot1sfconswuer-sentinel-network-data-book-january-december20 16/csn_ cy-20 16_ data_ book. pdf 

EPIC Statement 

House Approptiatious Comntittee 

2 FY19 Budget- Dept. of Commerce 

March 20, 2018 
109 

f 


33808A.071

Of particular urgency for Secretary Ross is the "Privacy Shield," which penuits the flow of 

data on European consumers to finns located in the United States that would otherwise be subject to 

European privacy law. EPIC and many others are concerned about the adequacy of the Plivacy 

Shield and tlte protection of consumer data. 

11 Without more substantial reforms to ensure protection 

for C.mdamental rigbts of individuals on both sides of the Atlantic, the Privacy Shield will put users 

at risk and mtdenuine tmst in the digital economy. There is also a growing sense tllat European 

leaders may simply withdraw from the transborder data sharing arrangement if certain steps are not 

taken: 

Appoint the Privacy Shield "ombudsman" at the Depru1ment of Corrmterce 

Reform Section 702 surveillance authority 

Stand up the privacy and Civil Libenics Oversight Board with five commissioners 

Stand up the Federal Trade Conuuission with five conuuissioners 

Limit excessive data gathering and surveillance at the border 

The United States must collllUit to protecting the data privacy of both US-persons rutd non-USpersons in order to protect users and instillmtSt in the digital economy." 

Secretary Ross should make clear his collllllltruent to a comprehensive approach to data 

protection, based in law. If he fails to do tltis, there is a real risk that the transatlantic flow of 

personal data wiJI be disrupted, and consmner privacy, as well as business oppomntity and 

innovation will suffer. He should be asked specifically a bow the US efforts to uphold Privocv Shied. 

We ask tltat this letter be submitted into the heruing record. EPIC looks fotwru·d to working 

with the Subcommittee on Commerce, Justice, Science, and Related Agencies on this issue. 

Sincerely, 

tsl :Marc 'RotenGern 

Marc Rotenberg 

EPIC President 

lsi Sam £ester 

Sruu Lester 

EPIC Consumer Privacy Fellow 

lsi Caitriona '[itznera{cf 

Ca.itriona Fitzgerald 

EPIC Policy Director 

lsi Sunny Xa n9 

Smmy Kang 

EPIC International Consumer Co1msel 

11 See, e.g., Testimony of Marc Rotenberg, EPIC Executive Director, Testimony before the U.S. House of 

Representatives Energy & Commerce Comm., Examiuiug the EU Safe Harbor Decisiou aud Impacts for 

Trnusotlafllic Dota Flows (Nov. 3, 2015), bttps:l/epic.orglprivacy/intVscbremsiEPIC-EU·SH-Testilllony· 

HCEC-11-3-final.pdf. 11 See, e.g., Letter from EPIC, et al., to Article 29 Working Party Cbaim1au Isabelle Falque-Pierrotin, et al., on 

Privacy Shield (Mar. 16, 20 16), https:l/epic.orglprivacy intVscbrcmsiPriv·Shic ld-Coa~tion LtrMar2016 pdf. 

EPIC Statement 

House Approptiations ComJllittee 

3 FY19 Budget- Dept. of Commerce 

March 20, 2018 
110 


33808A.072

t 85 Admiral Cochrane Drive 0. Suite 105 

rnA Flexible Packaging r r~. Association 

CoMecting. Advancing. Leading. 

Annapolis, M021401 

Tel (410) 694-0800 

Fax (410) 694-0900 

www.llexpack.org 

Flexible Packaging Association (FPA) 

Statement for the Record 

House Ways and Means 

Hearing o n U.S. Trade Policy Agenda 

Wednesday, March 21, 2018 

and 

Hearing with Commerce Secretary Ross 

Thursday, March 22, 2018 

My name is Alison Keane, and I am President and CEO of the Flexible Packaging 

Association (FPA). FPA is the voice of U.S. manufacturers of fl exible packaging and their 

supplie rs. The association's mission is connecting, adva ncing. and leading the flexible 

packaging industry. Flexible packaging represents over $30 billion in annual sales in the 

U.S. and is the second largest and o ne of the fastest growing segments of the packaging 

industry. The industry employs over 80,000 workers in the United States. Flexible 

packaging is produced from paper, plastic, film, aluminum foil, or any combination of these 

materials, and includes bags, pouches, labels, liners, wraps, rollstock, and other flexible 

products. With respect to a luminum foil, th is packaging includes everyday food and 

beverage produ(.ts such as candy, salty snacks, yogurt, and beverages; as we ll as healt h and 

beauty items and pharmaceuticals, such as aspirin, shampoo and shaving cream. Alumi num 

foil provides the ba rrier protection from oxygen, light and bacteria that these products 

need to ensure stable shelf-life and freshness. Aluminum foil is a lso used by the flexible 

packaging industry for medical device packaging to ensure that the products packaged, 
111 


33808A.073

such as absorbable sutures, human tissue, and artific.ial joints, maintain their efficacy at the 

time of use. 

This Section 232 investigation, that was initiated under the Trade Expansion Act of 

1962, was to determine what, if any, effects imports of aluminum have on national security. 

FPA is not aware of any impacts aluminum foil imports for use in the packaging industry 

has on U.S. national security and the Department of Commerce Report entitled "Effects of 

Aluminum Imports on the National Security," (Report) did not specify any. FPA supports 

efforts to protect domestic manufacturing and ensure national security, however, these 

efforts must consider the impact and consequences on all U.S. manufacturing industries, 

and the recently imposed 10% tariff on aluminum imports does not Al uminum foil imports 

necessary for the packaging industry, and without application for national defense, should 

have been excluded from the tariffs. In its investigation, the Administration was to 

consider a range of factors related to national security, including the economy and the 

effects of foreign competition on the economic welfare of domestic industries, including 

impacts on employment. However, this does not appear to have been the case. These 

import restrictions on aluminum will have a significant negative impact on the nexible 

packaging industry and its employment in the U.S with regard to aluminum foil converting. 

FPA was pleased to see that one aspect of the Report was adopted in the 

Administration's proclamation instituting the aluminum tariffs - the process for exclusions 

from the tariffs "upon request of affected parties if the steel or aluminum articles are 

determined not to be produced in the U.S. in a sufficient and reasonably available amount 

or of a satisfactory quality or based upon specific national security considerations." 

However, according to the direct-final regulations implementing the exclusionary process 

(83 FR 12106, March 19, 2018), trade organizations, such as FPA, can not petition on behalf 
112 


33808A.074

of their respective members, even though our members would all be making the same 

request- that aluminum foil is exempted as it is not make domestically in the quantities 

and quality needed for the packaging industry. Many manufacturers, particularly small 

businesses, rely on their trade associations to assist them in responding and negotiating 

solutions to government regulations. By not allowi ng trade associations to file on behalf of 

their industries, this rule is encouraging excessive and duplicative filings and will 

disproportionately impact small businesses. And, the tariffs went into effect on March 23, 

2018, when the earliest possible date Commerce could grant an exclusion would be May 18, 

2018, when the exclusions will "generally" be approved. So, there is no guaranteed 

timeframe in which petitioners will know whether or not their petition has been approved 

and they will have already been paying the tariff for at least 90 days. The damage to U.S. 

flexible packaging jobs may very well already be done after 90 days of this tariff, and once 

again, this process will certainly disproportionately disadvantage small converting 

businesses that cannot afford to front these costs. 

Further, there is little to no clarity on the petition process from the rule. Commerce 

must s upply FAQ's answeri ng such questions as how confidential business information 

(CBI) can be submitted. Right now, there is simply a check box on the form where 

businesses can state that they have CBI information and there is no indication of the 

process for submitting such; whether or not the petition is incomplete without the 

information and if so, what the timeline for completion would be; nor if the arbitrary 25-

page limit of the petition includes or does not include this CBI. Similarly, the rule states 

that Commerce may approve a broader exclusion request to apply to multiple similarly 

situated importers but gives absolutely no information on how groups of companies can 

apply for this broader exclusion. Again, as trade associations such as FPA, do not "use 
113 


33808A.075

aluminum in business," we can not file on behalf of multiple companies. If a product 

exclusion is granted because it is not manufactured domestically in quantities and quality 

necessary for the industry - why wouldn't that exclusion be granted to all users of the 

product? Lastly, the exclusion process. if granted, would only be applicable for one-year. 

Will companies have to petition for the exclusion every year? If the product is not available 

domestically now, why does Commerce believe it will be available next year, or the year 

after, or ever? It should not be up to individual companies to prove to the Administration 

that these products do not exist domestically, this should have been part of Commerce's 

analysis before instituting the overly broad tariff in the first place. Even if the domestic 

aluminum foil suppliers guaranteed to start making the aluminum foil gauges nexible 

packaging manufacturers need tomorrow- it would take several years for the mills to 

produce the qua ntity and quality of the foil our companies need. Further, under Federal 

Food and Drug Administration regulations, substitution of the foil s ubstrate could take two 

to ten years for approval, depending on use in packaging for food or medical devices. 

FPA is also concerned about the lack of transparency with regard to the Section 

232 remedy and the process Commerce will use to monitor and report on its effects. As 

stated above, while the investigation was supposed to take into consideration the effects of 

foreign competition on the economic welfare of domestic industries. including impacts on 

employment; the Report failed to address downstream industries dependent on aluminum 

or steel. How will Commerce monitor and report on the effect of this tariff on the primary 

manufacturers of aluminum in the U.S.; let alone downstream industries. which were 

ignored in the Report? Commerce must be accountable to show the impacts to all affected 

industries and ultimately work towards alleviating the devastating impacts of these tariffs 

on downstream users of aluminum products and mitigating the burdensome and 
114 


33808A.076

unnecessary paperwork this exclusionary process would apparently mandate on an annual 

basis. 

The Section 232 investigation and proposed remedy is paralleling an International 

Trade Commission (lTC) investigation and remedies for Chinese aluminum foil imports. 

Thus, FPA members are being penalized twice - first with the lTC anti-dumping and 

countervailing duties that in some cases exceed 140%, and then with the new 10% tariffs 

on other imports of aluminum foil, which are applied on top of the duties already in place. 

The consequences of the tariff under this investigation, combined with the duties from the 

lTC probe .. is the loss of flexible packaging jobs in the U.S. The negative impact on 

American jobs by cutting off the supply of aluminum foil for flexible packaging 

manufacturing will far outweigh any job benefits that are envisioned by the lTC and Section 

232 taxes. These duties and tariffs are leading to U.S. companies sourcing aluminum foil 

from other non·U.S. manufacturers at a much higher cost; Chinese suppliers of printed or 

otherwise converted aluminum foil products entering the U.S. market, since this bypasses 

the duties; andjor U.S. companies moving flexible foil packaging production outside the 

U.S .• thereby reducing the amount of U.S. foil converting jobs. There is simply no scenario 

where the benefits to the U.S. aluminum manufacturers outweighs the detriment to the U.S. 

flexible packaging industry. 

Aluminum foil used by the flexible packaging industry is not manufactured in the 

U.S. in the quantities and qualities needed. Failure to invest, and quality lapses, including 

gauge, width, and lack of appropriate alloys all contribute to the fact that the U.S. producers 

of aluminum foil are not able to serve the U.S. flexible packaging industry. In fact, the lTC, at 

its preliminary hearing on March 30, 2017, found that domestic ultra-thin foil production 

"may be limited or nonexistent" Thus, the packaging industry in the U.S. should be granted 
115 

f 


33808A.077

an exclusion for aluminum foil imports from the Section 232 tariff. Since FPA is not eligible 

to petition on their behalf, Commerce should recognize the broad-based exclusion the rule 

mentions to reduce the repetitive and burdensome petitions it will received with regard to 

this foil for flexible packaging manufacturers. 

FPA shares the same goal as the domestic aluminum foil producers who want more 

American jobs and understands the importance of protecting national security. This tariff is 

not the answer. The Admi nistration should find ways to work together to improve our 

country's competitiveness. Everybody loses in unfair trade cases, especially the American 

consumer. 

Thank you. 
116 


33808A.078

) · MiDSTREAM AMERICAN PETROlEUM INSTITUTE 

ENERGY 

EQUIPMENT a 

INFRASTRUCTURE 

Au.tANCE 

March 22, 20 18 

Hon. Kevin P. Brady 

Chainnan 

Collllllittee on Ways and Means 

Washington, DC 20515 

Dear Cbainnan Brady and Ranking Member Neal: 

Hon. Richard E. Neal 

Ranking Member 

Committee on Ways and Means 

Washington, DC 205 15 

A"iSOCIA~ 

~ 

ON 

The associations snbmitting this letter request that our comments be included in the record for the hearing 

held on March 22 with Commerce Secretary Wilbur Ross. Our specific conm1ents relate to the Section 

232 tariffs recently imposed on steel imports, and the impact these new tariffs will have on the entire 

energy sector, including pipelines. 

National security requires pipelines to deliver the energy America needs, and pipelines require specialty 

steel products not always avmlable i.n sufliciem quantities and specificauons from domestic 

manufacturers. Pipeline projects create constntction jobs, bring affordable energy to millions of 

American consumers, and support American energy production. 

For oil and natural gas pipelines, federal safety requirements and industry standards require steel 

specifications beyond those conm1only used in other markets, such as automobiles or building materials. 

Pipeline-quality steel also is a niche market representing only about three percent of the tota l U.S. market 

for steel. Because this type of steel is more expensive and time-consuming to make, domestic producers 

largely have exited tlus market, leaving the U.S. wi th linuted productive capacity for this product. In 

particular, domestic capacity is insufficient to meet the antic ipated demand for large-diameter and/or 

thick-walled pipe that operators use to consmtct pipelines. For certain steel products, there is zero 

domestic availability today. To further support our concerns, we would like to submit the lCF study 

Feasibility and Impacts of Domestic Conrenr Requiremenrs (or U.S. Oil and Gas Pipelines that was filed 

with the Department of Commerce in May 2017. The bottom bne is that imports of both pipeline-quality 

steel, and pipe products, are necessary for timely construction of the new pipeline infrastntcture needed to 

link natural gas and o il producers with industrial, power generation and residential customers. 

Pipelines put Americans to work. Already. 75 percent of spending on a pipeline project ends up in the 

hands of American workers and businesses. A typical 300-mile pipeline project would generate 

approximately $1.8 billion in U.S. worker compensation and domestic spending. Tariffs that include 

pipeline steel will delay or reduce that S 1.8 billion benefit. Pipeline projects are also vital to national 

security. Because of insufficient pipeline capacity, certain areas of our count.ry continue to rely on 
117 

f 


33808A.079

imported fuels to meet basic energy needs. As you weigh important concerns about broad steel market 

issues. we urge caution because American energy jobs depend on specialty pipeline steel products. 

We urge policymakers to broaden allowed product exclusions and country exemptions from the new 

tariffs to increase application efficiency, consider existing anti-dumping and cow1tervailing duties on 

covered products, and consider pre-existing purchasing and procurement agreements, for steel products 

needed for energy production, processing, refining, transportation, and distribution. Failing to do so will 

threaten American energy workers and conswners. We appreciate the Commerce Department's 

conm1itment to review exclusion requests promptly through the process published in the Federal Register 

earlier this week. We are concerned, however, that failure to allow broader exclusions - and instead 

require each company to apply for product-speci fie exclusions - could result in delays and uncertainty. 

~/15~ 

Andrew J. Black 

President and CEO 

Association of Oil Pipe Lines 

Mark Sutton 

President and CEO 

GPA Midstream Association 

Dena Wiggins 

President and CEO 

Natural Gas Supply Association 

3'~~~ Jack Gerard 

President and CEO 

American Petroleum Institute 

Sincerely. 

Donald F. Santa 

President and CEO 

Interstate Nalllral Gas Association of America 

Toby 

~ Mack 

President and CEO 

Energy Equipment and 

Infrastructure Alliance 

Charlie Riedl 

Executive Director 

Center for LNG 

Barry Russell 

Presideot and CEO 

Independent Petroleum Association of America 
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Statement of Richard Woldenberg on Possible Chinese Toy Tariffs 

Submitted to the 

House Committee on Ways and Means 

The United States House of Representatives 

March 20, 2018 

My name is Richard Woldenberg, and I am CEO of Learning Resources, Inc. located in Vernon Hills, 

Illinois. 1 am submitting this testimony on behalf of our company. Our company is a family business 

which develops and markets educational products and educational toys in the United States and dozens 

of other countries. We outsource the manufacturing of our products overseas, and as a result, we are a 

significant importer (of our own products) into the United States. Many of our products are made in 

China under our control. 

We have grave concerns about reports that the President intends to impose high tariffs on toys made in 

China by the end of March. The imposition of tariffs on toy imports is completely unrelated to 

allegations of Chinese theft of intellectual property and forced technology transfers in other industries, 

and is rife with risk and unintended consequences. Our industry is highly dependent on China as a 

manufacturing hub, and thus an easy t arget in trade disputes with China. I fear that the future of our 

company, and the many jobs we provide, are at stake here. We are a small business under the Federal 

government definition and believe that the problems we will face under a harsh import tariff regime will 

be experienced by many other small business importers in the United States. 

Our Company: 

Learning Resources, Inc. (LR) was founded in 1984 and is located in Vernon Hills, Il linois and has about 

150 employees in the U.S. and U.K. The company is part of our family business group which turned 100 

years old in 2016; I am the third generation of my fami ly to run this business, and we were proud to 

welcome the first member of the fourth generation into our business last year. LR develops and markets 

proprietary educational toys and materials in Vernon Hills but has manufactured most of its 1,200 

products overseas since the late 1980's. Jobs at our company pay well, turnover is low and we are an 

important member of our community, injecting many millions of salary and benefit dollars into the local 

economy annually. In 2013 and again in 2016, LR tried and failed to find factories located in the United 

States interested in making our products. In other words, we know from recent experience that we have 

no realistic option to make our products in the United States, with or without the coercive pressure of 

tariffs. High tariffs will just shrink our business and impoverish our consumers. 

Toy Tariffs Will Hit the Wrong Target: 

Our China factories are not State-owned: 

Our business largely depends on factory relationships in China. To my knowledge, we do not do 

business with any Chinese government-owned or controlled entities. The factories that we use are 
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private businesses, typically family businesses like ours. These businesses are subject to law, and pay 

fair wages to make our products in a responsible manner. The factories are subject to Code of Conduct 

audits and certifications, and must also pass compliance audits by local authorities. The high quality 

products we make in our Chinese factories satisfy U.S. safety standards and other international safety 

standards. We do good business in China with good people. 

Losses by our partner factories will hurt us. Our partners are hard working and honest people who do a 

great job making consumer goods for Americans to buy and enjoy. They do not have deep capital 

reserves, however. Their economic suffering at the hands of U.S. tariffs will come out of our pockets, in 

the form of higher costs, lost production capacity, ruined teams or forgotten know-how, weakened 

balance sheets and broken trust. When the President pushes Humpty Dumpty off the wall, we know he 

cannot be put back together again. 

Chinese enforcement of our property rights has been reliable: 

We have ~ experienced intellectual property theft by our factories. We register our intellectual 

property in China, as elsewhere, and rely on Chinese lawyers and Chinese courts to enforce our rights in 

our innovations. We have been successful in enforcing our rights in China, in part because of our legal 

ability to close the U.S. market to infringers. We are not confident we will have the same leverage when 

the President closes U.S. markets to all Chinese toy companies preemptively. 

In fact, a greater issue in our business is the economic health of our factories, which can be shaky at 

times. We have seen factories go out of business, leaving our U.S. business endangered. In one 

notorious case, a big factory closed overnight, leaving our business exposed with many important 

proprietary molds In legal limbo. However, within a short period of time, a Chinese judge ruled in our 

favor in the local insolvency proceeding and allowed us to recover our molds in time for Christmas toy 

production. The Chinese judge's decision to uphold our property rights in the molds saved our holiday 

selling season. In our experience, Chinese courts and Chinese judges have been respectful of our 

property rights even though we come from another country. 

Our company has no realistic ability to move its supply chain to another country: 

We have business reasons for the assignment of products to specific factories, whether in the U.S. or in 

other countries. There are many considerations for these decisions. Based on our market knowledge, 

we locate our manufacturing in the most efficient way possible. We know of no other markets where 

we can get the range of services and skills necessary to make our products at the best possible cost. We 

have also made repeated attempts to develop a U.S.·based supply chain but cannot do so on any basis, 

even inefficiently. We have no known realistic alternative to our current supply chain. 

Our products are used in American Schools: 

Toy tariffs will harm American schools because many toy companies cross over into school supply. 

Notably, our company was formed to supply schools with hands-on learning tools in 1984. U.S. Customs 

regulations treat our educational products as "toys", which means that the cost of tariffs will force us to 
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raise the cost of school products. The big losers will be poorly-equipped American schools, and the 

American families depending on them. This is yet another example of the self-destructive nature of 

import tariffs aimed at the wrong target. 

Our industry is greatly weakened right now: 

The demise of Toys R Us is a material event in the American toy industry. Not only did TRU have U.S. 

market share of 20-25%, leaving a huge hole for many companies in the wake of its liquidation, but it 

also played a special role in the market for the introduction of hot new toys. The absence of TRU from 

the marketplace removes a critical industry marketing vehicle, not to mention a brand ambassador and 

a critically important source of revenue. Notably, TRU inflicted massive losses on many toy companies in 

September 2017 when it sought Chapter 11 bankruptcy protection, and again in March 2018 when it 

announced plans to fully liquidate. This was a kind of a "Double Indemnity" event for the toy industry. 

Adding tariffs at this time will devastate the health of an already weakened American toy industry 

employing hundreds of thousands of Americans. 

The vast majority of imports are made by Small Businesses: 

It is well-known that 97% of U.S. importers are Small Businesses (U.S. Census data, 2014). The average 

import value per annum per congressional district is about $1.5 bil lion from Small Business alone. The 

annual import value (2015) for the U.S. Small Business community was a very healthy $631 billion 

(https://www.census.gov/foreign-trade/Press-Release/edb/2015/exhld.pdf). Toy tariffs will certainly be 

a Small Business tax. According to the U.S. Census Bureau, there were more than 191,000 small 

business importers in 2015 in the United States. Toy tariffs will put many small business jobs at risk and 

there should be no presumption that those jobs will come back if Mr. Trump later reverses course. 

Just Because We Start a Fight Doesn't Mean We Will Have the Power to End it: 

The effect of toy tariffs is unknown and may be irreversible: 

Our industry has never experienced high tariffs. The burden of toy tariffs was last felt in the early 1990's 

and the removal of those small tariffs led to dramatic industry growth. In that same time period, retail 

prices have fallen on an adjusted basis while innovation has skyrocketed. It is reasonable to assume that 

high tariffs will sharply reverse that progression. The cost of tariffs will have to be passed on to American 

consumers, and the financial burden of the tariffs will drain cash availability at victimized toy companies. 

The outcome of this grand trade experiment cannot be foretold but it is certainly not going to be 

pleasant. Jobs lost because of this ill-considered policy may never return. The historic lessons of SmootHawley need to be taken seriously. 
121 

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Retaliation may leave a permanent mark on certain industries owing to lack of trust: 

The imposition of tariffs on our industry has no precedent. No one has a plan to deal with it, and our 

factories will immediately become financially sick. Under these circumstances, when the U.S. 

government demonstrates a willingness to act capriciously and unpredictably, trust can be forever 

damaged. Who will be willing to invest in reliance on prevailing trade practices after that? We will have 

to deal with this externality for years to come. That's a cost we will never get back. 

Retaliation will be followed by reinvigorated foreign competition: 

The likelihood of retaliation for high tariffs is great. Market access removed because of aggressive trade 

actions may cede market control to foreign competition. As everyone knows, it's easier to retain a 

customer than to win one back. The government is playing with our life's work with these tariffs, and 

the future is murky. We will have no control over the removal of measures taken in response to the 

President's provocative tariff plan. 

Conclusion: 

Regardless of the justifications supporting toy tariffs, no one is going to miss the point that costs are 

going to skyrocket. In the wake of t ax reform designed to improve corporate competitiveness, the high 

toy tariffs will come as a shock to an unsuspecting corporate community preparing for expansion. The 

voters' anger will only mount as job losses pile up and prices rise. 

There must be another, better way to fix trade imbalances with China, and it is Congress' responsibility 

to find it. Thank you for considering my views. 
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33808A.084

(() MillerCoors· A MOLSON'&cuOOMMNY 

House of Representatives Committee on Ways and Means 

Hearing with Commerce Secretary Ross 

Statement of Gavin Hattersley- Chief Executive Officer of MillerCoors 

Hearing Date: March 22, 2018 

Chairman Brady and Committee Members: 

I am Gavin Hattersley, the Chief Executive Officer of MillerCoors. We brew in eight different states, 

including your home state of Texas. We have a uniquely strong heritage in both Wisconsin and Colorado 

as Frederick Miller began brewing his beer in Milwaukee, Wisconsin in 1855 and Adolph Coors began in 

Golden, Colorado in 1873. 

I also serve as Chairman of the Beer Institute, one of the oldest trade associations in America that 

promotes beer and its responsible consumption as well as sound public policy and regulation for all of 

America's brewers, beer importers, and beer industry suppliers. 

Thank you for the opportunity to submit a statement for the record about the recently announced 10% 

tariff on imported aluminum. While t he tariff itself is quite concerning, we are eager to learn more 

about the Department of Commerce's recent ly released Interim Final Rule regarding exemptions and 

exclusions. We are closely reviewing that rule and will have further comment for the Department of 

Commerce as they consider next steps. 

I would like to share our story as an iconic American brewer, and an integral part of an industry that 

provides products of refreshment and delights millions of consumers. The beer industry contributes 

over $350 billion to the US economy. MillerCoors is the Chicago·based US business unit of Molson Coors 

Brewing Company, a New York Stock Exchange listed company, which is based in Denver, Colorado. 

Collectively, we brew, market and sell beer in the US, Canada, Europe and in over 60 ot her markets 

throughout the world. 

MillerCoors directly employs over 8,000 hard·working Americans who are dedicated to making the 

highest quality, best tasting and most refreshing beers and other malt beverages. We sell our products 

in all 50 states and also export our products worldwide. MillerCoors insists on building its brands the 

right way: through brewing quality, responsible marketing, sales, environmental and community impact. 

The combined brewing legacies of the Miller Brewing Company and Coors Brewing Company go far 

beyond Wisconsin and Colorado. We also have brewing operations in California, Georgia, Ohio, Oregon, 

Virginia and Texas. And as you might imagine, our vast supply chain provides critical ingredients and 

inputs for our great beers and stretches even further into other states like Idaho, Montana, North 

Dakota, South Dakota, Washington and Wyoming for barley, hops, flavorings, glass, packaging and other 

materials. 

Last year, M illerCoors brewed and shipped over 56 million barrels of beer within the United States, and 

package about 65 percent of that beer in aluminum cans and aluminum bottles. To make our cans, we 

Page 1 
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33808A.085

need aluminum- and a lot of it! That is the equivalent of about 4,000 (four thousand) 747 jumbo jets 

worth of aluminum each year. Beer in aluminum containers has a long history within our company. In 

fact, Bill Coors (now 101 years old) invented the seamless two-piece aluminum container in 1958 and 

started the first aluminum can recycling program 55 years ago. 

In these comments offered to the committee today, I would like to convey the potential impacts of the 

proposed tariff on our company and the US brewing industry, and share how this tariff will impact the 

way that I manage our business for the remainder of 2018 and beyond. 

In short, this tariff-or any other unanticipated cost thrust upon a business late in the first quarter of 

any year- can cause large shifts in the way we approach our business operations. Our planning cycle 

was completed and approved in the fall of 2017, and a ten-percent impact on !!.QY line item can 

potentially impact capital investment, innovation, marketing support and other items that may hinder 

the performance of our business. 

Taking a broader view, recent economic analysis performed by John Dunham & Associates shows that 

the industry-wide impact of the aluminum tariff could cost the US brewing industry alone over $345 

MILLION dollars each year. The total national economic impact is estimated to be nearly $2.S BILLION 

dollars when all economic activity from the supply chain, all the way t hrough to the restaurant or tavern 

owner and ultimately the American consumer is considered. 

I recall some of the comments made recently by Secretary Ross and some White House officials when 

they referred to the costs associated with the tariff as "de minimis." Mr. Chairman, I can assure you that 

we at MillerCoors take this tariff very seriously and with those impact numbers, there is nothing "de 

minimis" about it. All in, our industry purchases $2.7 BILLION dollars of aluminum for our can products 

each year. In addition, brewers of all sizes increasingly are moving to aluminum packaging material due 

to consumer preference, reduced weight, increased brand promotion, reduced transportation costs and 

impact on the environment. 

While I am unable to provide direct costs to MillerCoors to the Committee today due to the uncertainty 

of the exclusion process, it is fair to say that the direct impact of t his tariff to MillerCoors is in the tens of 

millions of dollars. 

Those costs only go higher next year, and higher still in future years. 

Our ability to support innovation and give the consumers what they want is impacted due to the direct 

cost of the tariff. This is compounded further when consumers show a preference for those products in 

aluminum containers. For example, one of our most successful package innovations over the past few 

years was the aluminum pint bottle. Initially launched with Miller Lite, the 16-ounce aluminum pint has 

been extended to Coors Light and has been a very popular package ever since. In fact, we've invested 

tens of millions of dollars to install a new can line at our Elkton, Virginia brewery just a few hours from 

the Capitol building. 

This aluminum tariff could challenge our ability to make capital improvements to any of our breweries 

or other investments in our business, including in our people. We recently located a global business 

service operation in Milwaukee, Wisconsin and will add over 150 well-paying jobs to the community. 

Additionally, I am very proud to share news about our recent expansion of our Tenth Street Brewery, 

also in Milwaukee, to allow for a more nimble innovation pipeline and ensuring that the supply of our 

great Leinenkugel brands from Chippewa Falls, Wisconsin are able to meet growing consumer demand 

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33808A.086

across the country. The costs associated with this tariff could not only affect our business, but also the 

many local contractors who would provide the equipment and labor to install these projects if we have 

to make the difficult decision to curtail, defer or cease those activities. 

MillerCoors operates in one of the most competitive global industries in the world. And in the US, we 

compete in the largest profit pool within the industry. Our business is dependent upon our ability to 

manage our supply chain, brew quality beers, keep costs at a minimum, re-invest in our business and 

hire the best available workers. I say that because our competitors wake up every morning with the 

same objective. To say competition w ithin the American beer business is fierce- is a major 

understatement. 

To add insult to injury, our competitors in the wine and hard liquor industries do not use aluminum for 

product packaging, except for novelty items. Quite simply, this tariff is equivalent to a tax increase on 

the American beer industry alone and further erodes the cost structure between beer, wine and hard 

liquor which leaves our industry at a significant competitive disadvantage. 

From an international standpoint, our foreign competitors in the beer industry will see their costs 

unaffected by this tariff, t hereby decreasing the cost differential between their imported products and 

our domestic beer offerings. Whether unintended or not, this is a consequence that will be felt by the 

entire US brewing industry and beer drinkers. The tariff also will add costs to the beer we export to 

other countries, again leaving us at a competitive disadvantage when seeking to promote American 

brands abroad. 

Because a tariff is a forced cost, our ability to absorb that shock is never as simple as "pass it along to 

the consumer" as some would suggest. We pride ourselves in earning the trust and confidence from our 

consumers by offering a quality product at a reasonable price. 

However, at the same time this tariff is thrust upon us, there are serious problems and distortions in the 

aluminum marketplace. Purchasers of aluminum, including the beer industry, are encountering serious 

pricing irregularities and potential anti-competitive conduct by aluminum producers, merchants, 

traders, and others which warrant investigation by the Congress and other government regulators, 

including the Commodity Futures Trading Commission (CFTC). 

The price of the raw input materials for aluminum, like any other commodity, can be volatile at times 

moving both higher and lower based on market fundamentals. These are normal market price actions 

that both consumers and producers expect to see over time based on normal supply and demand 

factors for which they can and do hedge and protect themselves accordingly. With the exception of the 

past several months, aluminum prices have been relatively stable apart from the fact that there has 

been a massive surplus of aluminum in both the global and the US markets in recent years. 

Nonetheless, consumers of aluminum have been forced to pay rising costs for aluminum for no apparent 

market based reason. The source of these rising costs are the recent increases in the "Midwest 

Premium" (MWP) that is inherent in all North American aluminum contracts and charged to all end 

users of aluminum in the United States, purportedly for the cost of storage and transportation of 

aluminum to end users. The MWP has undergone sharp irrational price spikes in recent months, 

including doubling since Secretary Ross released Commerce's recommendations (chart attached.) This 

price spike occurred despite the fact that logistical costs of sourcing metal from within the U.S. and 

around the world has had until now minimal change, with no significant increases in the cost to 

transport or store aluminum. 

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33808A.087

As shown in the attached chart, the MWP spot price has more than doubled (from 9 cents to 20 

cents/lb.) since the announcement of possible aluminum tariffs by the Administration. Each penny 

movement in the MWP translates into hundreds of millions of dollars in increased cost to the beverage 

industry. This steep price increase has occurred even though t he aluminum tariff is not yet in effect, and 

at a time when the industry is faced with a large surplus of aluminum stocks in the US and other storage 

facilities around the world. We are concerned that the MWP increases may not reflect actual trades for 

aluminum or purchases, but rather are based only on offers in the market without any actual consumer 

transactions, sale or movement of physical metal taking place. 

I will add one final observation that all of the issues I have mentioned are magnified due to the recently 

passed US tax reform measures that were intended to make companies like ours more competitive with 

our global competitors, and to benefit American workers and consumers w ith larger paychecks. Sadly, 

this ten-percent tariff on imported aluminum has the direct and opposite effect. It seems that any 

benefit to MillerCoors from last year's tax reform w ill be negated by the tariff. 

And whi le I may not be in a position to offer national security observations, I am fairly certain that 

imported aluminum to make beer cans does not impact national security. After all it is only 2% of all 

imported aluminum, but it does allow our consumers to enjoy a cold and refreshing beer after a hard 

day's work. 

I appreciate this Committee' s consideration of my testimony on behalf of MlllerCoors. 

Sincerely, 

Gavin Hattersley 

Chief Executive Officer 

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33808A.088

Platts Midwest Premium (MWP) 

$21 $19 $17 

$15 

$13 

511 

u.s. Aluminum Premiums 

Cents/LBS 

"---!::::::: OJL>JH I '>. ____-/ I 

Sb __............. s .....- ;1 ............. ( ....... 

$1 

J•n-17 Feb-17 M•r-l1 l\jlr-J7 M•V-17 Jun-17 Aug-17 5eP-17 Oct-17 Nov-17 Oec-17 

-PI•tu MWP Delivered (Cent$/lBS} 

Pu!sident T

po

tariff at 1

3/S/1

Feb-13 

The MWP price has skyrocketed almost three fold since the Commerce Department delivered its 

recommendations to the White House, and further since President's Trumps announcement 
127 


33808A.089

Written Testimony of 

Scott Smith 

P•·esident 

Precious Metals Association of No1·th America 

Befon~ the 

House Committee on Ways & Means 

Hearing with Commerce Sen etary Ross 

Tbu•·sday, March 22, 2018 

Chairman Brady and Members of the Committee, 

My name is Scott Smith and I am the CEO of Pyromet, which is a privately owned precious 

metals manufacturer and refiner of silver, gold, and platinum group metals. Since 1969, Pyromet 

has been a reputable name in precious metals and precious metals management. I also serve as 

President of the Precious Metals Association of North America (PMANA) and am submitting 

this written testimony on behalf of our members. Our industry has serious concerns with recent 

action taken by the Department of Commerce following its Section232 investigation. The 

PMANA is particularly concerned with possible repercussions from our trading partners that can 

significantly affect j obs along the precious metals supply chain. 

Background 

In February 2018, as a result of its Section 232 investigation, the Commerce Department 

provided a recommendation for President Trump to act to protect domestic steel and aluminum 

industries. Following the Commerce Department's recommendations, the President announced 

increased tariffs of25 percent on imported steel and 10 percent on imported aluminum - with the 

possibility for exemptions. 

Last week, the PMANA learned that the European Union (EU) is considering retaliatory tariffs 

on U.S. products that accounted for $8.2 billion of trade in 2017. Almost 20 percent, or $ 1.4 

billion, of these proposed tariffs target precious metals products manufactured in the United 

States. lf fully implemented, these retaliatory tariffs pose a serious threat to recyclers, refiners, 

and manufacturers all along the precious metals supply chain. 

If the Administration follows-through with steel and aluminum tariffs on the EU, it will prove to 

be counterproductive for the precious metals industry which calltlot afford additional attacks 
128 

Æ 


33808A.090

from the international community. The industry is already under attack from our trade partners -

namely China - with the onslaught of counterfeit bullion coins and bars entering the country. 

Trade partners should play by the same rules, but our trade policy needs to be more targeted 

which is why the PMANA recommended that the USTR act against inadequate policies in China 

that promote the spread of fake bullion into the U.S. 

Policv Proposal 

Rather than impose tariffs that would undercut ongoing effotts to address counterfeiting, the 

PMANA recommends that Congress amend 15 U.S. Code § 2101 to expand marking 

requirements to include bullion investment coins and bars, and that our trade partners be held to 

the same marking requirements in future agreements. 

Precious metals workers should not be punished for the international community's negative trade 

practices. The implementation oftaritTs, whether it be through Section 232 or Se,ction 301, will 

be extremely detrimental to the industry's ongoing efforts to address intellectual property 

infringement by the international community. 

Thank you for giving the PMANA the oppommity to submit these comments to the Committee. 

lf you or your staff have any questions, please do not hesitate to reach out to us. We are more 

than happy to discuss our concerns with you or your staff and look forward to working together 

to protect consumers and businesses from counterfeit products. 

111111