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The problem is the exemptions, particularly on goods from China, are caught up in the broader fight between the world’s two largest economies. Both sides have quickly escalated and are showing few signs of backing down.
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”The first question from me is, ‘When will the China tariff rates settle?’” said Kelly Ann Shaw, who served as deputy assistant to the president for international economic affairs under Trump and is now a partner at the law firm Hogan Lovells.
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She argues the 145% US tariffs on all Chinese imports and China’s 125% retaliatory tariffs won’t last for the next four years. But “I don’t expect to see any formal exclusion process without more clarity and stability in the relationship,” Shaw said.
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Until recently, the Trump administration publicly rejected even the notion of any tariff leniency. Some trade hawks in the administration have been eager to avoid a repeat of Trump’s first term, during which companies lodged more than 30,000 requests for exemptions to his initial China tariffs.
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But since launching his bigger tariff plans April 2, Trump has responded to persistent personal lobbying by CEOs to add to a list of exclusions decided on via an opaque and informal process.
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That has left frustrated companies scrambling to lodge requests wherever they can. It’s also given new relevance to an obscure bureaucratic process — launched last October by the Biden administration — where the requests for clemency on imported Chinese machinery now reside.
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Those applications are in bureaucratic limbo, with companies saying they haven’t had any response. The Trump administration has not said whether it will even consider the applications. Neither the Office of the US Trade Representative nor the White House responded to requests for comment.
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March Deadline
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But amid the lack of any other official process, companies have seen the process as a way to at least get in requests as Trump has raised the tariffs on Chinese imports alone to 145%. A majority of the 1,111 applications have come since Trump took office, with more than 730 coming in March ahead of a March 31 deadline, according to a Bloomberg analysis of the applications.
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“Granting a tariff exclusion for manufacturing equipment incentivizes and accelerates US manufacturing and US development of industries which China may have a strategic interest in,” executives at Trump mega-donor Elon Musk’s Tesla wrote in one of four requests filed March 31. “Tesla seeks this exclusion to specifically increase its US manufacturing capacity.”
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The company, which in recent weeks has warned investors that tariffs and a broader economic slowdown are likely to hit its bottom line, did not respond to a request for comment.
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In an April call with investors, Tesla chief financial officer Vaibhav Taneja said Tesla’s energy unit, which represents a small but growing portion of the EV maker’s business, would see “outsized impacts” from tariffs because the company sources LFP battery cells from China.
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Taneja said the company is in the process of commissioning manufacturing equipment to make such cells in the US because existing equipment can’t service the needed capacity.
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Fellow carmaker Ford has lodged a dozen different exclusion requests related to imports of machinery it needs to get a Michigan battery plant up and running by next year.
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In a March 31 application for a “jelly roll wrapping and insertion machine” used to make lithium ion batteries, Ford representatives wrote that it would help them meet the requirements of the US-Mexico-Canada Agreement that Trump negotiated in his first term.
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“But in order to achieve these outcomes in the coming years, we need access to the JR machines in question,” they added, pointing out that nothing similar was made in the US.
English (US)