While the U.S. Commerce Department announced Wednesday that it would grant tariff exceptions on steel products to firms in Japan and four other countries, the win may only be temporary as the policy change appears to be motivated by U.S. business interests rather than a sincere desire to shift away from protectionism, experts said Thursday.
As a result, Japanese negotiators are not expected to change their negotiating stance, continuing to push, both in public and behind the scenes, for the complete removal of the metal tariffs levied this spring.
Details of the exceptions showed that 42 exclusion requests were granted to seven companies in the U.S., allowing them to purchase certain steel products from abroad without being compelled to pay the 25 percent levy implemented in April this year.
“This first set of exclusions confirm what we have said from the beginning — that we are taking a balanced approach that accounts for the needs of downstream industries while also recognizing the threatened impairment of our national security caused by imports,” Commerce Secretary Wilbur Ross said in a statement released by his department.
At a news conference Wednesday, Chief Cabinet Secretary Yoshihide Suga stopped short of praising the U.S. policy move, stating only that Japan is “paying attention” to the policy change. However, Suga was clear that the government intended to continue to press for the removal of the U.S. steel and aluminum tariffs.
“Our country will continue to persist in our request to the U.S. that an exception be granted for additional tariffs,” Suga said.
Yorizumi Watanabe, a professor of policy management at Keio University, said that despite the exemption representing a slow move toward a bettering of the trade relationship between the U.S. and Japan, he still expects Japanese negotiators to work toward the removal of all the newly imposed steel and aluminum tariffs, a policy Tokyo views as unlawful and inconsistent with World Trade Organization rules.
But with the recent U.S. policy shift, Watanabe believes that most of the heavy lifting leading to the exceptions most likely came from the companies themselves, rather than government negotiators.
“I think private companies from quite a number of countries filed petitions and appeals to the U.S. Department of Commerce, separately from their governments,” Watanabe said.
The decision also highlights the growing awareness of the risks that tariffs pose to U.S. businesses.
“For companies who use steel and aluminum materials in their products, raising tariffs pushes costs up and can have a negative impact on business,” said Kenichi Kawasaki, professor at the National Graduate Institute for Policy Studies, who has conducted multiple analyses of the proposed tariffs’ economic impact.
In cases where U.S. companies source steel exclusively from abroad, there are potential scenarios where an increase in tariffs could make business models unviable, a fact that policymakers appear to have acknowledged with Wednesday’s tariff exceptions.
“Exclusions generally are granted if there is no domestic availability and there are no overriding national security concerns with regard to the specific product,” read a statement from the Commerce Department.
Although the U.S. government stated its intention to grant tariff exceptions through a “transparent process” as of Wednesday, a senior official at the Metal Industry Division of the Japanese trade ministry claimed they had received no additional information from their U.S. counterpart regarding which Japanese companies had been granted exceptions.