Los Angeles Times | March 5, 2002
Trade: The move, while short of the 40% sought by the industry, is certain to draw opposition from U.S. allies.
From Associated Press
WASHINGTON -- President Bush today slapped punishing tariffs of 8 percent to 30 percent on several types of imported steel in an effort to aid the ailing U.S. industry, drawing criticism from American allies and mixed reviews in Congress.
"An integral part of our commitment to free trade is our commitment to enforcing trade laws to make sure that America's industries and workers compete on a level playing field," Bush said in a statement issued by the White House.
He urged U.S. steel companies to take advantage of the "temporary safeguards" and restructure their industry. The tariffs-and-quota plan, which takes effect March 20, can be amended by Bush if the industry's financial crisis worsens or eases in the next three years.
The action, while short of the 40 percent tariffs sought by companies, was generally applauded by industry.
House Minority Leader Dick Gephardt, D-Mo., accused the president of not going far enough. "The situation remains dire," he said.
However, Senate Majority Leader Tom Daschle, D-S.D., called it a good move that balances the concerns of competing interests.
The long-awaited decision was described by advisers and lawmakers who were briefed as a compromise approach, one designed to protect the U.S. industry while minimizing backlash from overseas and from U.S. manufacturers that rely on cheap steel.
The plan exempts several U.S. trading partners--including Canada, Mexico and a handful of impoverished nations. It does not embrace an industry-sought $10 billion bailout of pension and health care costs for retired workers from bankrupt companies.
More than 30 steel makers have declared bankruptcy in recent years and the price of basic steel has fallen dramatically. How to protect the industry without hurting the economy with steep price increases is a question that could sway congressional races in November, and even affect Bush's prospects for re-election in 2004.
The tariffs will undoubtedly be passed on to consumers, but the administration did not estimate by how much. "Guessing prices is not my business," U.S. Trade Representative Robert Zoellick told reporters at the White House. He has previously called tariffs tax increases, a position embraced by many Republicans.
Critics say increased tariffs will raise prices on items including cars, houses and appliances. One critical study suggested the average family of four would spend up to $283 more a year.
"I take this action to give our domestic steel industry an opportunity to adjust to surges in foreign imports, recognizing the harm from 50 years of foreign government intervention in the global steel market," Bush said, offering laid-off steelworkers a modest amount of help for job training and health insurance costs.
White House officials provided details of the plan, including:
--Tin mill steel, a 30 percent tariff.
--Flat steel products including cold-rolled, plate-rolled and coated sheet steel, 30 percent.
--Hot-rolled bar and cold-finished bar, 30 percent.
--Carbon and alloy fitting and flanges, used in car production, 13 percent.
--Circular welded tubular products, 15 percent.
--Stainless steel bar, 15 percent.
--Stainless rod, 15 percent.
--Stainless steel wire, 8 percent.
--Rebar, a product used largely in construction, 15 percent
--Slab steel would get a 30 percent tariff, but only after the first 5.4 million tons are imported.
The list reflects the political ramifications of Bush's decision.
Tin mill steel received one of the stiffest tariffs and is the type produced by Weirton Steel, one of the biggest employers in West Virginia. Bush won the state in an upset victory over Vice President Al Gore in 2000 largely on his promise to protect the steel industry.
The auto industry is one of many U.S. manufacturers depending on cheap steel and did not want high tariffs. The car industry uses lost of steel flanges.
Steel industry lobbyists pushed for the highest possible tariff on slab steel, produced largely overseas and used by smaller West Coast manufacturers. Those U.S. companies wanted to keep the steel cheep. Bush's split-the-difference approach calls for tariffs but only after a certain amount of the product is imported.
The industry had hoped that Bush would set a low quota, allowing for a quick kick-in of tariffs. It was not immediately clear how Bush's quota of 5.2 million short tons compares to current import levels.
In settling on a quota-and-tariff mix, Bush acted on a recommendation by the U.S. International Trade Commission that he impose tariffs between 20 percent and 40 percent.
Bush decided not to embrace the industry's request for a $10 billion bailout of pension and health care costs for retirees of bankrupt steel companies.
The decision not to pick up these so-called "legacy costs" appeared to torpedo a proposed consolidation within the steel company. US Steel, the nation's largest steel maker, had said it would buy four companies that had filed for bankruptcy protection if the government picked up the costs.
Robert S. Miller, chairman of Bethlehem Steel Corp., one of the companies that would be part of such a merger, said "We have discontinued any discussions on the merger with (U.S. Steel) because they said they could not do it without comprehensive legacy relief."
Nations hit hardest by the tariffs include China, Japan, South Korea, Ukraine and Russia.
The European Union cautioned that relations with the United States would suffer under such a tariff decision and hinted at possible trade retaliation against American products.
In Moscow, Russian Prime Minister Mikhail Kasyanov said the tariffs "will have a negative impact on Russia's slab steel industry," but would not spark a trade war. The nations are already fighting over U.S. poultry imports.Los Angeles Times:
