Globally, the steel industry is in terrible shape. Economists largely blame the short-sightedness of industry executives and interventions by government policymakers.
Experts say this confusion represents a classic example of the dangers of government intervention.
No one is happy. U.S. trade partners are threatening retaliation against a long list of U.S. exports and are angrier than Bush’s foreign policy advisers expected. Domestic steel users, steel state politicians and unions are just as angry at the U.S. administration which is showing signs of backing down.
Bush’s tariffs which range from 8 percent to 30 percent on a wide range of products were supposed to give U.S. steel makers time to become more efficient and competitive. That’s the same argument presidents since Lyndon Johnson have used when they limited steel imports. Over the past three decades, tariffs have cost steel users $120 billion.
But just as in the past, those efforts have failed again. Most of the old-line American steel companies are still losing money and that limits their ability to modernise.
Source: Neil King Jr. and Robert Guy Matthews, So Far, Steel Tariffs Do Little of What President Bush Envisioned, Wall Street Journal, September 13, 2002.
For text (WSJ subscribers) www.wsj.com
For more on Trade and Tariffs http://www.ncpa.org/iss/tra/
FMF Policy Bulletin\17 September 2002
