Ok, I get your issue now.
Kt is often ignored in static cases for ductile materials. The thought is that any localized yielding for that ONE TIME loading will not fail the component due to plastic strain hardening, etc. Since the event in your analysis occurs more than once, then yielding at all would not be a good thing especially since you are using FS=1 (and the contents under pressure may leak). You should do a low cycle fatigue analysis via strain-life method, or assume a crack is present due to the welding and do a fracture mechanics approach.
Before doing all this, I would ask yourself how well you know the load you are applying. Often times a larger load is applied and compared to yield with FS=1, knowing that the actual load is lower and thus FS is actually >1.
For a lot of products, more material is so inexpensive compared to the cost of the analysis we are discussing above that you are better off going that route.
Also, what material are you welding that you are knocking the strength of the HAZ so much?
Finally, if you are sure of the load cases, sure of the geometry, sure of the material properties, you have properly meshed and converged an FEM, and you show stresses higher than the material strengths, then you have an issue.
You may eventually show through non-linear analysis that the thin wall tubes strengthen due to the plastic strain at yield and can ultimately handle the load at FS=1 instead of FS=.99, but plan on spending some time and money.
May be better to get thicker material or to take some of the estimation / overestimation out of the load cases.
ZCP