Bush administration to formally repeal most of its 20-month old tariffs as soon as this week
WASHINGTON – The Bush administration has decided to repeal most of its 20-month old tariffs on imported steel to divert a likely trade war with the European Union, administration and industry officials said yesterday. The President Bush will likely announce his decision by week\’s end.
The decision is one of the boldest, yet most difficult political calculations of this term as the president will face criticism from the steel industry and may lose votes in steel-producing states, including Pennsylvania, West Virginia, and Ohio – all of which carry scores of electoral votes in any presidential election. By the same token, however, President Bush may gain votes in Michigan where automakers and parts manufacturers have been hurt by the steel tariffs.
"This is a gutsy move that only a president in strong standing could make," said taxpayer advocate Grover Norquist, who heads Americans for Tax Reform (ATR) in Washington. "Steel manufacturers claim they need the tariffs to complete industry consolidation, but at the same time tariffs discourage those very industries from modernizing or becoming more efficient – why modernize when you\’re shielded from competition? President Bush\’s decision to repeal the tariffs is a very difficult one to make, but making the right decision oftentimes is."
In March 2002, President Bush placed tariffs on imported steel of up to 30% for three years, to cheers from the steel industry and groans from his conservative supporters. As profits, credit ratings, and stock prices have increased within the steel industry, automakers and other steel consuming sectors have fared less well due to more costly, domestic steel.
The White House considered phasing out the tariffs, but concluded that such a move would not satisfy the EU, which had threatened to impose sanctions of up to $2.2 billion dollars as soon as December 15. Japan made a similar threat last week.
"Ninety-nine percent of economists say free trade is a universal benefit, but the public has always thought differently," continued Norquist. "But a new class of voters – the Investor Class Majority – who are invested in mutual funds spanning every industry in the economy, are beginning to turn the tide toward free and unfettered trade between nations."