Government denies request to remove wear parts from Section 301 tariffs

Government denies request to remove wear parts from Section 301 tariffs

ISRI received notification that the government denied its request for auto shredder wear parts to be excluded from the tariffs.

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November 1, 2018

The Institute of Scrap Recycling Industries Inc. (ISRI), Washington, received notification from the U.S. government on Oct. 26 that it denied the association’s request for auto shredder wear parts to be excluded from the Trump administration’s Section 301 tariffs against China.

Adina Renee Adler, senior director of international relations at ISRI, says the Section 301 tariffs that impacted the auto shredder wear parts were first put into place on July 6. However, since some entities can only source certain products from China, the government allowed individuals to apply for exclusion from the tariffs by Oct. 16. Adler says ISRI applied for exclusion by Aug. 23.

“We filed as early as possible,” she says. “Even though we had until October, my impression was that they would review these as they came in, so the earlier the better.” 

According to the official letter ISRI received, the administration claims that the association “failed to show that this particular product is available only from China.” 

Adler says the association interpreted the administration’s response to mean that the administration may only support requests if 100 percent of a product is sourced from China. She adds that ISRI’s member survey revealed that 85 percent of auto shredder wear parts come from China.

“We are disappointed by this outcome and will continue to press the administration to resume talks with China to resolve trade differences,” she says. 

Some wear parts importers have filed their own requests, and Adler says the association was told that a couple of these requests were also denied. With the denial, she says the Section 301 tariffs on auto shredder wear parts will continue to adversely impact ISRI members.

“It certainly impacts the competitiveness of the industry,” she says. “With extra cost to outlay, that will impact business.”

With most ISRI members sourcing auto shredder wear parts from China—about 85 percent—the tariffs will have a large cost to them. Adler says the shredder operators cannot pass these additional costs onto operators either because of the way the scrap market is organized. “It’s not a cost that can be passed on, so they’re having to absorb [the cost],” she adds.

The Office of the United States Trade Representative (USTR) has received a number of requests for exclusion. To date, Adler says the USTR denied 816 exclusion requests. There are still 1,494 requests for exclusion to review, 173 of which could be approved, and an additional 2,533 requests for exclusion that have yet to be viewed. None of the exclusion requests have been approved to date. 

Looking ahead, Adler says the government has not yet provided any process for appeal or process to request tariffs to be lowered.

“So, all we can do is reiterate our calls to the administration to negotiate with China and find a resolution,” she says. “If they can resolve differences, it is our hope that the administration would remove tariffs.”