Parties and Alliances: The Politics behind Steel Tariff Exemptions

• In Event: Domestic Politics and Trade

Abstract

In March of 2018, as part of his “America First” economic policy, President Donald Trump signed an executive order imposing a 25% tariff on imported steel products. Section 232 of the 1962 Trade Expansion Act delegates the enforcement of such tariffs to the Department of Commerce, which initiated a process by which firms can get exclusions from the import tariffs if no US steel producer is able to produce the amount and type of steel needed. The process further enables US steel producers to object to these exclusion requests and assert their ability to meet the demand. In this paper, we explore both the impacts of both domestic and international political factors on the exemption decisions issued by the Department of Commerce. Using a dataset of 163,522 exclusion requests we scraped directly from the Department of Commerce exclusion portal and company records from the Mergent archives to match firm locations with exclusion filings, we map out tariff exemptions by Congressional district and explore the linkages between the party affiliation of district and state representatives and the likelihood of receiving an exemption. Incorporating information about where the firm would like to import from, we also examine the role preexisting diplomatic and trade relationships with other countries plays in exemption decisions. Our findings indicate that, even at this granular decision-making level, the Department of Commerce is broadly impacted by concerns about international diplomatic and trade relationships, and that the domestic political landscape does impact a firm’s likelihood of receiving an exemption.

Author

• Vivienne Born, Texas Woman's University