Manufacturer sues over tariffs it praised

Less than a year after JSW Steel lauded U.S. metal tariffs for aiding the steel industry, the company is suing because it’s not exempted from the levies.

The producer says the Commerce Department wrongfully denied waivers for steel-slab raw materials, forcing the steelmaker to pay tens of millions of dollars in tariffs. It relies on imports of these materials from India and Mexico because the U.S. doesn’t produce steel slab of sufficient quality or quantity, JSW said in its complaint.

The move comes after Chief Executive Officer John Hritz in October credited the Trump administration’s tariffs for helping pave the way for JSW’S $1 billion U.S. expansion plan, which would triple output at its Texas plant and add a facility in eastern Ohio’s Mingo Junction. Hritz said at the time that the administration had helped stem a “reprehensible deterioration” in the industry, and that the tariffs gave the company a cushion to make major investments.

“The point [of] why these guys weren’t given exemptions is to encourage investment in the U.S., and that’s why JSW is building a brand new electric-arc furnace, basically,” said Andrew Cosgrove, the senior industry analyst for Bloomberg Intelligence. “They’re just going to have to bite the bullet in the interim by importing slabs and paying the tariff.”

A spokesman for JSW didn’t return requests for comment. Kevin Manning, a Commerce Department spokesman, declined to comment.

JSW, a unit of India’s JSW Steel Ltd., says it manufactures “steel plate and pipe for use in critical infrastructure projects” including natural gas and oil pipelines. The Commerce Department is authorized to grant exclusions from tariffs to U.S. businesses that rely on types of steel that aren’t produced in the U.S. in sufficient quantities.

Total U.S. steel slab consumption is about 8.2 million tons, of which 7.2 million was imported from abroad, meaning the domestic industry is 88% dependent on foreign metal, according to Cosgrove.

JSW broke ground for a new electric arc furnace in Baytown, Texas, the company announced in October 2018, with the company thanking “policies in Washington” as it set out to hire 1,000 new workers and invest as much as $1 billion to expand its U.S. operations.