New York Times | By DAVID E. SANGER and RICHARD W. STEVENSON | March 5, 2002
WASHINGTON, March 6 - In an effort to shore up the sagging American steel industry, the Bush administration announced today that it would impose tariffs of 8 percent to 30 percent on a broad range of steel products imported from Japan, South Korea, Taiwan, China and Europe.
The tariff-and-quota plan is a three-year project that can be amended by President Bush if the steel industry's financial crisis gets worse or improves, administration officials said.
``This relief will help steelworkers, communities that depend upon steel, and the steel industry adjust without harming our economy,'' Mr. Bush said in a statement.
The tariff plan is shy of the 40 percent penalties sought by many in the steel industry.
The plan excludes many developing countries, as well as Mexico and Canada, and the steel industry has said that both the amount of the tariffs and the exclusions will not be enough to stave off the wave of bankruptcies and layoffs that have plagued the industry for years.
For Mr. Bush, today's announcement is a delicate balancing act. Key states in the coming congressional election - including West Virginia, Pennsylvania and Ohio - depend heavily on steel jobs, and the issue has been an emotional one among voters.
But Mr. Bush knows that the tariffs will tarnish his free trade reputation abroad, and perhaps hamper him as he seeks the help of Europe, Russia and other countries in supporting his war strategy.
People involved in the debate over how far the United States should go in protecting the industry said the issue's complexity was underscored for Mr. Bush last week when Prime Minister Tony Blair of Britain raised it with him in a phone call.
Mr. Blair, who has made Britain perhaps the staunchest ally of the United States in the war on terrorism, suggested to Mr. Bush that restricting imports would not be the right response to the problems facing the steel industry in the United States, people who have been briefed on the discussion said.
On Monday the British Trade Secretary, Patricia Hewitt, said Britain would support trade retaliation by the European Union if the United States imposed tariffs on steel.
Trade officials on both sides of the Atlantic - as well as those in China and Russia - are already bracing for a knockdown fight over steel, one that they are concerned could slow the already halting progress toward a new round of world trade liberalization talks.
But the most immediate calculations facing Mr. Bush are domestic.
Having floated the outlines of its approach recently, the administration heard Monday from steel makers, unions, users of steel and other groups with an interest in the outcome. The general message was that any effort to find a middle ground would leave all sides unhappy.
The White House press secretary, Ari Fleischer, acknowledged as much, likening the issue to a Rubik's Cube, where any move to help one side causes problems with another. ``The president understands how very many sides there are on this issue,'' he said.
The nation's remaining big steel makers, which have seen their ranks mowed down by a succession of bankruptcies, are pushing the administration to impose tariffs of up to 40 percent on most types of steel imports from all over the world.
The big companies, led by U.S. Steel, say a period of protection from what they consider unfair foreign competition would allow them to regroup, consolidate and invest in more efficient equipment that would enable them to survive. Without the help, they say, most of the industry will wither away, along with tens of thousands of jobs.
Users of steel, however, say that steep tariffs and the ensuing rise in steel prices would drive up their costs, leading to job losses across a wide swath of industry.
Representatives of the big steel companies said the administration would be making a mistake if it exempted developing countries from the tariffs and allowed some portion of the steel from other countries to come in free of tariffs. They said the practical effect of such a compromise would be to set tariff levels so low that they would be ineffectual.
If developing nations are exempted and if a portion of the unfinished slab steel coming into the United States is not subject to the tariffs, the domestic industry ``would get close to no relief,'' said Robert Lighthizer, a Washington trade lawyer who represents U.S. Steel and some of the other steel makers.
Leo Gerard, president of the steel workers' union, said exemption of developing countries would have to be accompanied by a strict program to guard against a surge of imports from them and to keep developed countries from evading the tariffs by shipping their steel through the developing nations.
But representatives of groups lobbying the administration not to impose heavy tariffs said the compromise floated by the White House would still extract much too heavy a price from the economy.New York Times:
