To guard the economy, Bush must pay costs of repealing steel tariffs

When President Bush slapped steep tariffs on imported steel in March 2002, the risky economic gesture was viewed as a blatant move to win political support in the steelmaking states of the Rust Belt. It seems West Virginia, Pennsylvania, Ohio and Indiana were deemed so vital to his 2004 re-election bid, Bush willingly embraced the tariffs at the expense of shunning fellow conservatives, suffering the wrath of foreign trade partners and making a mockery of free market ideals. The tariffs of 8 percent to 30 percent on most steel imports from Europe, Asia and South America for three years was, according to Bush, an attempt to give the U.S. steel industry breathing room to make changes necessary to compete globally. It was a bold political gamble that clearly backfired. This gift to the steel industry was not successful in winning significant election support from steelworkers. In August, the United Steelworkers of America endorsed a Democrat for president - Missouri Congressman Dick Gephardt. What's more, the policy angered some American manufacturers, such as automakers in Michigan, who were forced to pay higher prices for imported steel and, in turn, pass on that additional expense to consumers. While these domestic grumblings may have cost Bush some political capital, they pale compared to the potential damage caused by the backlash abroad. The steel tariffs have singlehandedly pushed the United States to the brink of a trade war with Europe, Japan and South America. In retaliation for penalizing imported steel, these normally reliable trade partners are threatening to impose sanctions on billions worth of U.S. exports, such as Florida citrus, textiles made in North and South Carolina, nuts grown in California and apples from the Pacific Northwest, according to news reports. The European Union and Japan have given the United States until Dec. 10 to repeal the steel tariffs, which were declared illegal by the World Trade Organization last month. If the tariffs remain, then sanctions on up to $2.2 billion in U.S. exports could be imposed as soon as Dec. 15. Not only could trade sanctions on exported goods cause major damage to the national economy and send the stock market in a tailspin, but Bush may also suffer a political backlash from those states hurt as a result of a hard line on steel tariffs. Although the official line is Bush is still mulling over his steel protections in light of the threatened trade sanctions, administration officials indicate the president will announce a repeal of the tariffs as early as this week. For the sake of the economy, they better be right. We're not surprised the White House is reluctant to make a final decision on this issue. After all, discontinuing the tariffs early is an act of political humility - an admission the policy was misguided and did more harm than good. Shifting course now also means Bush risks angering voters in key battleground states for next year's presidential election. Yet, despite the drawbacks, Bush has no choice but to ax the tariffs. After months of doom and gloom, the nation's economic picture is finally showing glimmers of improvement. The last thing the country needs now is to become mired in a nasty trade war. If Bush lets pride keep him from righting a wrong committed 20 months ago, he very well might cost the nation a chance for economic recovery and, as a result, find himself out of a job.

Easier to read (I hope)

When President Bush slapped steep tariffs on imported steel in March 2002, the risky economic gesture was viewed as a blatant move to win political support in the steelmaking states of the Rust Belt.

It seems West Virginia, Pennsylvania, Ohio and Indiana were deemed so vital to his 2004 re-election bid, Bush willingly embraced the tariffs at the expense of shunning fellow conservatives, suffering the wrath of foreign trade partners and making a mockery of free market ideals.

The tariffs of 8 percent to 30 percent on most steel imports from Europe, Asia and South America for three years was, according to Bush, an attempt to give the U.S. steel industry breathing room to make changes necessary to compete globally.

It was a bold political gamble that clearly backfired.

This gift to the steel industry was not successful in winning significant election support from steelworkers. In August, the United Steelworkers of America endorsed a Democrat for president - Missouri Congressman Dick Gephardt.

What's more, the policy angered some American manufacturers, such as automakers in Michigan, who were forced to pay higher prices for imported steel and, in turn, pass on that additional expense to consumers.

While these domestic grumblings may have cost Bush some political capital, they pale compared to the potential damage caused by the backlash abroad. The steel tariffs have singlehandedly pushed the United States to the brink of a trade war with Europe, Japan and South America.

In retaliation for penalizing imported steel, these normally reliable trade partners are threatening to impose sanctions on billions worth of U.S. exports, such as Florida citrus, textiles made in North and South Carolina, nuts grown in California and apples from the Pacific Northwest, according to news reports.

The European Union and Japan have given the United States until Dec. 10 to repeal the steel tariffs, which were declared illegal by the World Trade Organization last month. If the tariffs remain, then sanctions on up to $2.2 billion in U.S. exports could be imposed as soon as Dec. 15.

Not only could trade sanctions on exported goods cause major damage to the national economy and send the stock market in a tailspin, but Bush may also suffer a political backlash from those states hurt as a result of a hard line on steel tariffs.

Although the official line is Bush is still mulling over his steel protections in light of the threatened trade sanctions, administration officials indicate the president will announce a repeal of the tariffs as early as this week.

For the sake of the economy, they better be right.

We're not surprised the White House is reluctant to make a final decision on this issue. After all, discontinuing the tariffs early is an act of political humility - an admission the policy was misguided and did more harm than good. Shifting course now also means Bush risks angering voters in key battleground states for next year's presidential election.

Yet, despite the drawbacks, Bush has no choice but to ax the tariffs. After months of doom and gloom, the nation's economic picture is finally showing glimmers of improvement. The last thing the country needs now is to become mired in a nasty trade war.

If Bush lets pride keep him from righting a wrong committed 20 months ago, he very well might cost the nation a chance for economic recovery and, as a result, find himself out of a job.

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