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Bush pressured to cut steel tariffs

Secretary of the Treasury John Snow, Secretary of Commerce Donald Evans and other advisers want US President George W. Bush to roll back tariffs he imposed on US$3 billion in steel imports, people familiar with the matter said.

Bush's economic team will argue that the tariffs ended up hurting US manufacturers more than it helped steelmakers such as US Steel Corp, said administration officials and outside advisers who requested anonymity.

They said it hasn't been decided whether the team will recommend that Bush eliminate or just trim the tariffs, which are now as high as 24 percent.

Opponents of the tariffs blame higher steel prices that resulted from the duties for keeping 200,000 people out of work last year.

Administration officials say Bush hasn't decided whether to lift the tariffs and is waiting for a report due Sept. 19 from the International Trade Commission (ITC), an independent US government agency.

"We look forward to looking at the ITC report when it comes out," said White House spokesman Scott McClellan, adding that he expects no decisions about the tariffs before then.

The point of the tariffs was "to give America and its steel workers a chance to adjust to a large influx of steel," he said.

It's "too early" to comment on the economy team's stance toward the tariffs while different government agencies are still discussing the issue, said John Taylor, the Treasury Department's undersecretary for international affairs, on Friday.

"The steel tariffs have different kind of effects which are being assessed and estimated now," Taylor said. "There is a conversation going on about how to get to the heart of those estimates and make a policy decision."

Snow, Evans, Council of Economic Affairs Chairman Greg Mankiw, White House economic policy chief Stephen Friedman and other advisers want the tariffs removed or reduced in part because they're concerned the EU may impose sanctions on the US after a WTO appeals panel ruling last November, according to people familiar with the process.

The EU has drawn up a list of US$2.2 billion in goods that will be targeted with tariffs, ranging from fruit juice to T-shirts.

The US just last week submitted its appeal to the WTO of a ruling against the tariffs, which originally were set as high as 30 percent last March.

When the tariffs were first imposed, Bush followed the advice of political strategists rather than economic advisers such as then-treasury secretary Paul O'Neill, who said that the duties risked undermining his free trade agenda and hurting employment.

"All economists will agree that the steel tariffs are bad policy," said Kevin Hassett, a senior fellow of the American Enterprise Institute.

"The threat of WTO retaliation provides the Bush economic team with a welcome opportunity to persuade the politicians to do away with the tariffs," he said.

Other economists point to the success of the steel companies in restructuring over the past 18 months as a reason to end the protection. The tariffs gave an incentive for companies to buy out weak competitors, shut inefficient plants, adjust deals with unions and make new capital investments, financier Wilbur Ross told an ITC hearing on July 22.

Still, critics say that the success of the steel industry has meant losses for auto-parts makers, tool-and-die companies and other small manufacturers.
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