Bush rescinds steel tariffs

President Bush yesterday lifted steep tariffs on imported steel, citing new evidence that the 21-month program had enabled sagging U.S. steel companies to restructure and become more competitive with foreign producers.

“These safeguard measures have now achieved their purpose and as a result of changed economic circumstances, it is time to lift them,” the president said in a statement.

While Mr. Bush rescinded tariffs that the White House had planned to keep in place until 2005, he announced a stepped-up monitoring program to guard against a surge of foreign steel entering the country.

The removal of the tariffs ended the threat of a trade war with Europe and Japan and threw into flux the president’s re-election campaign strategy in steel-producing states, which supported the tariffs, and steel-consuming states, which opposed them.

Minutes after the president lifted the tariffs, effective at 12:01 this morning, the 15-nation European Union announced it would lift its threat of sanctions on $2.2 billion of U.S. products that would have taken effect Dec. 15.

The move has wide political impacts for next year’s presidential campaign, especially in states in the Rust and Steel belts — all targets of the Bush-Cheney 2004 re-election team. The tariffs had pleased the $50 billion steel industry in states such as Pennsylvania, Ohio and West Virginia, but angered small manufacturers and their workers in Michigan, Minnesota and Wisconsin.

Thomas J. Usher, head of the Pittsburgh-based U.S. Steel Corp., said: “The tariffs were working as planned, and have been instrumental in bringing about the improvements in the industry that we’ve seen over the last two years. This decision will complicate the historic restructuring that is ongoing in the industry.”

Said Leo Gerard, president of the United Steelworkers of America: “His unwillingness to defend U.S. trade laws is an affront to all American workers.”

But William Gaskin, president of the Consuming Industries Trade Action Coalition steel task force, called the end of the tariffs the “right decision for the 13 million workers in steel consuming industries, for the manufacturing sector that is just beginning to recover from tough economic times, and the overall U.S. economy.”

The watchdog group Council for Citizens Against Government Waste said the tariffs shored up the U.S. steel industry on the backs of average Americans.

“They were imposed at a high cost to consumers and taxpayers,” group President Tom Schatz said. “The only benefit to the U.S. economy … was the approximately $650 million collected in tariff ‘revenues’ from U.S. consumers.”

In March 2002, after the International Trade Commission had reported to the White House that a surge of imports was costing the industry as much as $2 billion a year, the president imposed tariffs ranging from 8 percent to 30 percent on 10 categories of steel products. At the time, Mr. Bush said he was doing so to “help give America’s steel industry and its workers the chance to adapt to the large influx of foreign steel.”

The proclamation establishing the tariffs said the restraints “shall not terminate until the earlier of March 21, 2005, or such time as the secretary of commerce establishes a replacement program.”

But in the official declaration yesterday rescinding the tariffs, the White House said the president is authorized “to reduce, modify, or terminate a safeguard action if … he determines that changed circumstances warrant such reduction, modification or termination.”

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