Feds deny steel plant’s tariff exemption

Steel pipe workers toil inside the Borusan Mannesmann plant in Baytown. Borusan sought a waiver from President Trump’s steel tariffs, but it was denied. The pipes Borusan produces are used primarily as casing for oil and natural gas wells.

Despite filing 19 requests with the U.S. Department of Commerce requesting a temporary exemption on steel tariffs, and having employees send postcards to local, state and federal officials including President Donald Trump, imploring them to honor the request, Borusan Mannesmann Pipe U.S. has been denied. 

Joel Johnson, CEO of Borusan Mannesmann, a company with Turkish roots that manufactures the welded pipe used by energy companies to pull oil and natural gas out of the earth, said without a waiver, the company faces levies of up to $30 million a year — a staggering sum for a business with plans to expand.

The Baytown steel pipe company had asked for a two-year waiver on a 25 percent tariff on steel imports, specifically a tariff exclusion for 135,000 metric tons/year of “green” steel tubing and casing they import from Turkey and finish at their Baytown facility. 

However, the U.S. Commerce Department said there are no “overriding national security concerns” to rationalize excluding the pipe company from the tariffs since the products are made within the U.S. at high enough rate. 

The company has said they are paying higher prices for imports of the raw material and the tariffs are also delaying major projects, including an additional $50 million to $75 million factory in Baytown that could result in approximately 170 new jobs as well as advancement opportunities.  

“We just found out about it, and everyone in the company is assessing what the next step should be,” Julie Mendoza, Borusan Mannesmann spokeswoman said. “Everyone is very disappointed in this decision and do not understand it. It would have added jobs in a critical area. All of the employees were involved in trying to make it happen.”

Mendoza added no decision about the future Baytown plant has been made. 

“No decisions have been made about anything at this point,” she said. 

Baytown Mayor Stephen DonCarlos was disappointed to hear the news of the waiver rejection.

“We are obviously hopeful something can be worked with the federal government to allow an expansion to continue,” DonCarlos said. “Borusan has been a good corporate partner with the city and we’ll do everything we can to support them in any expansion they might have. We will wait and see and hope this gets through.”

In June, Borusan asked their employees to write and send a slew of postcards to politicians such as Sen. Ted Cruz, Sen. Chuck Grassley, President Trump and Congressman Brian Babin, asking to please grant their request to be exempt from the tariffs. 

“Rep. Babin was deeply disappointed in the decision by the Department to reject Borusan’s waiver,” said Emily VanderBush, Babin’s spokesperson. “Rep. Babin spoke to the Secretary of Commerce about the importance of this waiver for a company that had chosen to invest money in Baytown and create nearly 200 additional jobs in our community.  He disagrees with the decision and is looking to see if there are additional options to address this.

Babin had sent a letter of support to Wilbur Ross, Department of Commerce secretary, stating the pipe company had requested a short-term waiver on the imported green tube from their parent company in Turkey. 

“The pipe will be finished in Baytown,” Babin said. “During the time of the waiver, BM will invest up to $75 million in their U.S. mill, and when that work is completed, there will no longer be a need for imports or the waiver, as this work will be wholly integrated at their U.S. facilities.

“The end goal that will be achieved with this waiver is exactly the type of investment and outcome that the Administration is seeking: increased domestic steel production and more American steel jobs,” Babin said. 

The request denial comes in the midst of a trade fight. A total of $34 billion in tariffs were placed on Chinese imports Friday, and China immediately retaliated with their own tariffs on U.S. goods. President Trump has also threatened to impose more tariffs, in the $16 billion range, on China with threats of placing more tariffs on $450 billion of Chinese imports already in waiting. China is expected to place 25 percent tariff on energy and chemical imports from the U.S.

JSW Steel also filed an exemption request with the U.S. Department of Commerce, asking to be excluded from the Section 232 remedy for carbon and certain alloy steels slabs. The steel company had commenced a $500 million investment for a new, state-of-the-art arc furnace and slab caster in Baytown. This investment is expected to add 500 jobs and create up to 1 million tons of new steelmaking capacity. In their request letter, JSW Steel said that pending the completion of the EAF/caster, they will require carbon and alloy steel slab imports from India, where its parent company is located, to continue operations in its plate and pipe mills in Texas. Without being excluded from the 232 Section remedy, they said they would be “unable to continue operating the Baytown plant on an economic basis while construction of the new EAF/caster is underway.” In addition, they said there is not a sufficient supply of U.S.-manufactured carbon and alloy steel slabs for the Baytown plate mill.  

The decision on JSW’s appeal has not been made yet.

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