Risking a political backlash, US President George W. Bush planned to announce yesterday that he is lifting most tariffs on steel imports to avert retaliation from Europe and Asia, administration and congressional sources said.
To cushion the blow to US steel makers, Bush is expected to expand an import licensing and monitoring system to help head off surges in shipments. The White House could also provide federal help covering pension and health care costs.
Bush's widely expected decision would come less than a month after the WTO's highest court ruled that the duties violated global trade laws.
The major policy reversal could spark a backlash against Bush in the battleground steel-producing states of Ohio, Pennsylvania and West Virginia.
But White House advisors concluded the tariffs were causing more harm than good and lifting them would boost Bush's standing among some manufacturers who buy steel, another important constituency.
The EU has threatened to sanction US$2.2 billion in US goods.
Eliminating the tariffs could also help allay market concerns that Bush, a Republican who ran as a champion of free trade, was relying on protectionism to shore up the US job market as he seeks re-election in next year.
Attempting to placate steel makers, the White House would pledge to vigorously enforce US anti-dumping laws and may change how duties are assessed to allow stiffer penalties, administration officials said.
Bush could also appoint to the International Trade Commission, which approves anti-dumping cases, a more steel-friendly commissioner when Democrat Marcia Miller's term expires on Dec. 16, trade lawyers said.
US Steel Corp chairman Thomas Usher, a sponsor of a Pittsburgh fundraiser that raised US$850,000 for Bush two days before the expected tariff announcement, sought to play down the short-term effect and urged that a strong monitoring system be put in place.
Steel industry sources said Bush could still suspend the tariffs, not terminate them, and then try to find another way to comply with the WTO.
Even before the final WTO ruling, members of Bush's economic and political team had urged him to lift the tariffs, saying they had served their purpose by giving the industry time to become more competitive after several bankruptcies.
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