On July 20, the Government Accountability Office (GAO) released a comprehensive report titled “Steel and Aluminum Tariffs: Agencies Should Ensure Exclusion Requests Are Needed and Duties Are Paid.” The report sheds light on the administration of Section 232 exclusions, which were imposed in March 2018 by the President due to national security concerns. These exclusions involved a 25 percent tariff on certain imported steel and a 10 percent tariff on select imported aluminum products, in accordance with the Trade Expansion Act of 1962.
To provide relief from these tariffs, the Commerce Department established a process for requesting exclusions. Interested parties applied to the Bureau of Industry and Security (BIS) seeking tariff exclusions. If approved, these requesters were allowed to import specific products without paying the imposed tariffs. The BIS would then transmit data about the approved exclusions’ specific parameters to the U.S. Customs and Border Protection (CBP), which would verify if an importer could legitimately claim an exclusion.
In response to a request for review, GAO conducted an analysis with the aim of evaluating three main aspects of the Section 232 exclusion process:
- BIS’s Measures to Ensure Exclusion Requests Are Necessary.
- The Consistency of Data Maintenance between BIS and CBP for Administering Exclusions.
- The Extent of Invalid Exclusion Use by Importers.
To accomplish this, GAO examined agency data, reviewed relevant documents pertaining to the exclusion approval and import processes, and conducted interviews with BIS, CBP officials, and industry stakeholders.
The GAO report highlighted several key findings:
- A significant portion of approved exclusions and exclusion quantities were not utilized, indicating inefficiencies in the exclusion process.
- There were inconsistencies in the data provided by agencies concerning some approved exclusions, raising concerns about data accuracy and management.
- Approximately $32 million in duties went unpaid due to the invalid use of exclusions. Invalid use was defined as the claiming of an exclusion in a manner that did not align with BIS’s parameters.
In response to these findings, GAO presented four recommendations to improve the Section 232 tariff exclusion process. They advised BIS to evaluate the results of the certification requirement and develop a more consistent data transfer process. Additionally, they recommended that CBP implement controls to prevent overclaiming of exclusions and recover duties owed as a result of invalid exclusion use. Encouragingly, both agencies, BIS and CBP, concurred with GAO’s recommendations.
For a more in-depth understanding of the report and its findings, the full GAO report can be accessed here [provide link].
This GAO report is a significant step toward ensuring the fair and effective administration of Section 232 tariff exclusions, fostering greater transparency, and safeguarding the integrity of the trade system.
