Bush Looks to Impose Steel Tariffs

President George W. Bush is expected to announce a 30 percent tariff for much of the imported steel. The official announcement is expected to be made March 5. According to a number of sources, the tariff would be geared toward the countries that have been having the greatest impact on the U.S. steel industry – China, Japan, Germany, Taiwan, South Korea, Brazil, Russia and Ukraine. The plan would exempt many poor nations, as well as Mexico and Canada from the export tax.

The domestic steel industry was looking for a more comprehensive 40 percent tariff on all steel imported into the United States. The 40 percent tariff would raise the price of steel by 10 percent.

Some opponents of the tariffs fear that an increase in the cost of steel being imported into the United States would raise the price of many of the end products that use a significant amount of steel, including automobiles, appliances and other heavy goods.

IN response to the expected tariffs, several countries have already protested the decision. One news report notes that Japan, one of the countries expected to be hit with tariff charges, is considering filing a complain with the World Trade Organization.

"If they were to launch safeguard tariffs or to make some sort of decision, we would carefully study the reasons for them to decide what we will do, including bringing the case to the WTO," said Katsusada Hirose, deputy minister of economy, trade and industry.  The New York Times

The European Union also is expressing concern with the possibility of more stringent policies for steel importing.

Steelmakers in the European Union worry that tough constraints on steel entering the U.S. could divert supplies of the metal to Europe, harming the profitability of the local industry.

According to Peter Fish, a steel expert at Meps, a UK consultancy, the importing into the EU of a further 3 million metric tons a year of steel, a small amount by the standards of world production, would be enough to push prices lower and harm the fortunes of European-based mills.

Such calculations explain the hard line taken by EU officials in recent weeks on the question of U.S. import controls. The officials have indicated that any tariffs could result in Europe imposing its own restrictions.

Last year, the world produced 840 million metric tons of steel, with the figure due to decline this year to 828 million metric tons as a result of capacity cuts.

About 40 per cent of all the steel the world produces crosses a national border before it is used, compared with 20 per cent in the early 1970s.

In 2001, the EU was a small net exporter of steel, with the region selling to other countries 3.8 million metric tons more steel than it imported. But it would require only a small amount of the steel now being imported into the US to travel, instead, to Europe to turn the EU into a net importer.

Last year, net imports to the US of steel are estimated to have reached 23.5 million metric tons, down slightly on the 27.6 million metric tons in 2000. However, the overall level of imports is still too high for many US steel producers, who believe that much of the steel is coming in from low-cost producers that have benefited from government subsidies.  Reuters