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U.S. Department of Commerce investigating whether foreign companies ducking steel tariffs

Steel coils are shown stored at the Thyssenkrupp steel factory in Duisburg, Germany. 

The U.S. Department of Commerce is investigating whether foreign steelmakers are circumventing anti-dumping and countervailing tariffs on imports of corrosion-resistant steel products.

Imports of corrosion-resistant steel from Costa Rica, Guatemala, Malaysia, South Africa, and the United Arab Emirates to the United States has skyrocketed by 29,210%, 35,944%, 151,216%, 629%, and 5,571%, respectively, since tariffs were imposed on those products from China, Taiwan and other countries. The U.S. Department of Commerce will look into whether that's because substrate from China and Taiwan is being rerouted through those countries in order to duck tariffs meant to offset subsidies or counteract the dumping of steel sold below fair market value, sometimes even the cost of production.

"Under U.S. law, Commerce may conduct a circumvention inquiry when evidence suggests that merchandise subject to an antidumping or countervailing duty order undergoes a minor alteration that brings the product outside the scope of the order," the U.S. Department of Commerce said in a news release. "Commerce may also conduct circumvention inquiries when evidence suggests that merchandise subject to an order is completed or assembled in the United States or third countries from parts and components imported from the country subject to the order. Additionally, Commerce can find that later-developed merchandise may also be covered by an existing order."

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In most cases, such probes are requested by domestic steelmakers like U.S. Steel and ArcelorMittal USA. This time, the federal agency determined by monitoring trade patterns it should launch an inquiry, which is a first. It's also the first time the U.S. Department of Commerce has self-initiated a probe into whether multiple countries are avoiding tariffs by mislabeling the country of origin or gaming the system by putting light finishing touches in countries with no tariffs on products substantially made in countries tariffs were imposed upon to enforce U.S. trade laws.

Corrosion-resistant steel is made at local steel mills, including Gary Works and ArcelorMittal Indiana Harbor in East Chicago. ArcelorMittal USA, U.S. Steel, Steel Dynamics and other domestic steel companies originally requested the tariffs, which were imposed in 2015 after the International Trade Commission found evidence of dumping and subsidies that gave importers an unfair price advantage.

The U.S. Department of Commerce said it has initiated 21 new tariff circumvention inquiries since 2016, a 133% increase.

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Business Reporter

Joseph S. Pete is a Lisagor Award-winning business reporter who covers steel, industry, unions, the ports, retail, banking and more. The Indiana University grad has been with The Times since 2013 and blogs about craft beer, culture and the military.