Bush Rescinds Steel Tariffs, Says Aims Met (AHAHAHAHAHAHA....the LIES)
The move heads off a possible trade war but creates rifts domestically between producers and manufacturers.
Political reaction is mixed.
By Edwin Chen and Richard Simon, Times Staff Writers
WASHINGTON — President Bush lifted tariffs on imported steel Thursday,
averting a costly global trade war but angering the domestic steel industry and
many of his Republican allies from Rust Belt states, where steelworkers have
benefited from the protective measures he imposed almost 21 months ago.
His decision came after the European Union threatened to levy $2.2 billion in
retaliatory tariffs on U.S. exports. Similar threats were made by other trading
partners, including Japan and China.
But the president justified
the policy reversal by
saying the tariffs, which
raised the price of
imported steel, "have
achieved their purpose"
— granting a weakened
domestic industry
sufficient time to
restructure and regain
profitability.
THE REAL STORY...NO SPIN BY THE LYING RETREATING WHITE HOUSE
In the End, Bush Was Pressed
The president halts his protectionist action early, confronted by a domestic backlash and the threat of foreign
retaliation.
By Warren Vieth, Times Staff Writer
CLEVELAND — The Bush administration's bold foray into steel
protectionism ended prematurely Thursday, the apparent victim of two major
miscalculations: a worse-than-anticipated backlash by steel consumers, and a
faster-than-expected retaliation by the rest of the world.
When President Bush imposed the tariffs almost 21 months ago, his advisors
saw them as a way to assist an industry in need, shore up support for
Republicans in the Steel Belt and advance America's trade agenda, all at the
same time.
In the end, they made
hardly anybody happy.
As many jobs were lost
in industries that buy
steel as were saved in
mill towns like
Cleveland, analysts say.
The administration
undercut its own
credibility in the broader
push for free trade while
alienating other nations.
And steelworkers ended
up endorsing a
Democrat for president
anyway.
"They're not heroes to
the downstream steel
users because they
screwed them for 21
months. And they're not
heroes to the steel
producers because they
gave them something
and then took it back,"
said Brink Lindsey,
director of trade policy
studies at the
conservative Cato
Institute. "It turned out to
be messy, if not
self-defeating politics."
Faced with growing
opposition from
domestic steel
consumers and imminent
retaliation by foreign
trading partners, Bush
declared his mission —
strengthening the
industry —
accomplished and lifted the tariffs 15 months ahead of schedule.
Yet to some industry insiders and analysts, the president's announcement
sounded more like an admission of defeat, a view shared by several workers in Cleveland, the
steel-making center of Ohio.
Although several ailing companies have been acquired by new owners and shuttered plants have been
brought back on line, steelworkers said the industry's restructuring was far from complete. Other
companies remain mired in bankruptcy, and their prospects may be poorer without the safety net of
steel tariffs.
"It really galls me," said Tony Panza, a training coordinator at the giant Clevelan d Works steel mill. "It
took us two years to get any help. We lost thousands and thousands of jobs and a lot of plants just to
get the president to finally do what he knew was right. Now look at his resolve."
Even among those industries that buy large amounts of steel, which generated much of the pressure to
rescind the tariffs, there was a sense that the president's action had come too late to save companies
caught in a severe price squeeze.
"When the tariffs came, they mortally wounded a significant percentage of the metal stampers," said Bill
Adler, president of Stripmatic Products Inc., a Cleveland auto parts fabricator. "A lot of the damage
has already been done."
For Bush, in the view of some analysts, it was a matter of cutting his losses.
"His tariff decision may cost him some votes, but European Union retaliation would have cost him a lot
more," said John J. Pitney Jr., professor of government at Claremont McKenna College. "Trade wars
kill jobs and end presidencies."
When the administration imposed the tariffs in March 2002, the domestic steel industry was on the
ropes. A supply glut had pushed prices to 20-year lows, more than 30 steel makers had filed for
bankruptcy, and nearly 50,000 jobs had been lost in three years.
The tariffs on imported steel were designed to give the industry breathing room to restructure by
enabling U.S. steel makers to raise prices. They were also expected to pay political dividends by
helping win congressional passage of "fast-track" trade negotiating authority for the president, secure
the reelection of vulnerable Republican lawmakers in the 2002 midterm elections, and improve Bush's
odds of carrying several critical swing states in 2004, particularly Ohio, Pennsylvania and West
Virginia, all major steel producers.
The first two objectives were realized: Bush narrowly won fast-track authority with the help of
steel-state lawmakers, and Republicans prevailed in key congressional races. But by ending the tariffs
ahead of schedule, analysts said, Bush may have negated any beneficial effect they might have had on
his own prospects in 2004.
"It's not going to be good for the president," said Peter Morici, a University of Maryland economist
who represented steel producers in their efforts to preserve the tariffs. "I don't know of any math that
permits him to become president for a second term if he doesn't win some of the states along the
steel-making string of Pennsylvania, West Virginia, Ohio, Indiana and Michigan."
Several analysts said it appeared Bush's advisors made at least two significant misjudgments in devising
the original protection plan.
First, the administration assumed incorrectly that even if the tariffs were struck down by the World
Trade Organization, which they were earlier this year, it would take about 36 months before U.S.
trading partners would be able to retaliate. By that time, the tariffs would have expired and the 2004
election would be history.
Instead, in a departure from previous disputes of this kind, the European Union was preparing to slap
$2.2 billion in punitive tariffs on a wide range of U.S. exports as early as next week. The targets were
carefully chosen to inflict maximum political pain: Florida citrus, Carolina textiles, Midwestern
manufactured goods, California farm products. It would have meant the biggest trade war in decades.
Second, the White House did not anticipate the extent of opposition the tariffs would generate among
businesses that turn steel into finished products such as cars and appliances. Instead of passing higher
prices on to consumers, many steel fabricating companies were forced to swallow the additional costs
by customers who threatened to take their business to China or elsewhere.
Analysts said the domestic backlash turned out to be far fiercer than expected, jeopardizing Bush's
political prospects in Michigan, Wisconsin and other steel-buying states. Meanwhile, the expected
payoff in steel-producing states was called into question when United Steelworkers of America
endorsed the presidential bid of Democratic Rep. Richard A. Gephardt of Missouri.
"It's very difficult for a Republican who's rhetorically a free-trade president to win over blue-collar
union workers," said Gary Hufbauer, senior fellow at the Institute for International Economics in
Washington. "I think even if he had kept the tariffs in place, he would not have gotten their support in
the election."
The final straw, several analysts said, was the prospect of an international trade war that appeared
likely to start much sooner than the administration had initially calculated. Not only were the Europeans
planning imminent retaliation, but Japan, China and other countries were threatening to follow suit.
Mickey Kantor, President Clinton's U.S. trade representative, said he thought Bush was justified in
imposing the tariffs last year to spur steel industry restructuring and secure fast-track negotiating
authority. But he faulted the president for not rescinding them when they first were struck down by the
WTO in March. Instead, the administration appealed, dragging out the process for eight months.
"The administration generally has given the rest of the world the impression that we don't play well with
others," Kantor said, referring to its unilateral actions on a range of issues. "Not following the dictates of
the WTO early on was just one more example of that."
In the view of some analysts, though, following the dictates of the WTO is exactly what the president
should not be doing.
"We really have to confront the fact that the WTO is not working for the interests of American industry
or American workers," said economist Robert E. Scott at the liberal Economic Policy Institute in
Washington. "Bush blinked in this case. He could have taken on the Europeans, and gone tit for tat with
them. I think they would have backed down at some point."
That's how it looks to Panza, the training supervisor at the Cleveland Works steel plant, who offered
what Bush might consider the ultimate insult.
"I think he's a liberal," Panza said of the president. "Trying through economic ways to save the rest of
the world is very liberal. I thought we got away from that kind of liberalism a long time ago. We should
worry about our own country."
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