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Posted on 03/05/2002 6:53:24 AM PST by KayEyeDoubleDee
WASHINGTON (Reuters) - President Bush was expected to announce on Tuesday that the United States will impose tariffs of up to 30 percent on most imported steel, sources said, in a decision bound to anger major U.S. trading partners in Europe and Asia and possibly spark retaliation.
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U.S. steel firms and steelworkers have asked for a 40 percent across-the-board tariff for four years on a broad range of steel imports. They blame low-priced imports for 31 bankruptcies since 1997 and are seeking temporary "safeguard" protection under "Section 201" of U.S. trade law.
Administration and congressional sources said the president would impose tariffs of up to 30 percent on many categories of imported steel from Japan, South Korea, Brazil, Russia and Ukraine. Canada and Mexico, partners with the United States in the North American Free Trade Agreement, and several developing nations would be exempt from the tariffs, the sources said.
The pricing contained in this proposal is based on the tariffs and import duties applicable to the materials to be supplied hereunder in effect as of the date of this proposal. Any increase in these tariffs and duties will necessitate a commensurate upward dollar-for-dollar adjustment of the price quoted herein.
ADD THIS LANGUAGE AS A SPECIAL CONDITION TO STANDARD T'S AND C'S FOR ALL PROJECTS WHICH INVOLVE IMPORTED MATERIALS
The Buyer acknowledges and agrees that the Seller has no control over increases in tariffs and import duties applicable to the materials to be supplied hereunder. Accordingly, any increase in tariffs and import duties that increase Seller's costs of materials shall entitle Seller to an equitable adjustment in price.
Steel is a perfect example: we bought Japanese steel from Japanese companies at a considerably lower price than our own parent company could buy the same steel in Japan.
That, gentlemen, is called dumping.
How was this done? The Japanese government provides their steel companies with massive tax breaks, because they know the importance to national security of having a viable steel industry.
And because they don't blindly believe everything the Wall Street Journal writes.
And it will accomplish nothing except to raise prices in general, force companies that were barely hanging on in a very competitive market to quit, and all steel from non-domestic sources will come from Mexican and Canadian supply companies, regardless of where it was actually cast or rolled. It will just cost more to ship it now.
Lots I bet.
Well said!This of course would be a defacto 10-20% devaluation of the dollar,something which is long overdue.It would stimulate our moribund export industries."Free market" economics is the rallying cry of drug-pushers and pimps.Congress should use it's constitutional authority to regulate the value of foreign currency vis-a-vis our own,i.e.,the use of tariffs and imposts.At last look,we were running a billion dollar a day deficit on the current account.Our good friend China was among the chief beneficiaries of our free-trade policy.We will always(at least for the foreseeable future)need a steel industry.It would be a shame to see it go by the wayside,and then have to deal with the importers on their terms.The same can be said of the farm indusry.
Worked a treat over there, didn't it? Working pretty good over here as well it appears.
"They" do dump goods here at lower price and "they" do benefit from direct and indirect government assistance -
"we" are a totally free trade market in comparison to both europe and asia.
A thirty percent tax on imported steel is probably not feasible - we use too much foreign steel.
So, bet that talk of high steel tariffs, even imposing them for awhile, is meant to rattle the cage by reducing their market.
To: Wyatt's Torch;Mr.BirdWhat's even sadder to me is that I have a brother who works for a US steel maker but has to travel overseas to assist with the setup and design of plants in foreign countries because the federal government and enviro-whacko's have made it cost prohibitive for plants in the US to be either built or upgraded and modernized.
There are only two options. Either make it so that the US companies can build plants here that can compete with the foreign plants or apply tariffs.
One generates revenue for the government and the other doesn't. Which did you really think they'd do?
7 posted on 3/5/02 8:17 AM Pacific by Bikers4Bush
because the federal government and enviro-whacko's have made it cost prohibitive for plants in the US to be either built or upgraded and modernized
And W doesn't have the nuts to change this. This is one issue that he should be preaching from the bully pulpit (in the same breath as a call for drilling in ANWR)
The fact that the steel industry is not competitive is because of decades of protectionism and a heavily unionized workforce that is retiring and drawing pensions. Hard to compete when your unionized workers are making $40 an hour. For another example look at India's auto industry....they have cheap labor and lax environmental standards, but you don't see too many Indian cars on American roads do you? It's because that industry, like America's steel industry, has been protected against competition for decades.
10 posted on 3/5/02 8:23 AM Pacific by Bikers4Bush
how do you feel about the Bush administration's shameless decision to go back on everything they've said about being free marketeers and impose punitive tariffs on imported steel?
It's a step in the right direction, but still inadequate.
The ideal solution is a relatively low, across-the-board revenue tariff of 10-20% on ALL imported goods from ALL foreign countries.
"Targeted" tariffs have the disadvantage of providing loopholes and, as others will be quick to point out, the potential to hurt other domestic industries.
A prime example is our failed embargo on the importation of Cuban goods. Cuban sugar has been routinely imported to the U.S. through the back door: Canada. Cuban sugar is shipped to Canada where it is dissolved in molasass. "Canadian" molasass is then legally imported to the U.S. where the sugar is easily refined back out. The leftover molasass is then exported back to Canada where the cycle is repeated. Large sugar-users (such as candy makers) are also closing their domestic factories and moving to Canada where they can legally use Cuban sugar, then import it as candy to the U.S.
An across-the-board revenue tariff of 10-20% would circumvent this type of abuse. Additionally, the revenue could be used to offset a major reduction or elimination of the corporate income tax, providing domestic producers a more "level playing field". (A Proposal to Abolish the Corporate Income Tax)
From a historical perspective, a revenue tariff of 10-20% is NOT excessive:
If I had the time I would plot the historical relationship between tariff rates and GDP (U.S. or world) or GDP growth. Notice the very high tariff rates right before the Great Depression (hmmmmmm.....interesting). And the high rates of growth (and low tariffs) we now enjoy and have enjoyed over the past few decades. Look also at comparisons of per capita GDP versus trade barriers by country.
Protectionists fail to appreciate that protectionism makes everything cost more......think the computer you are typing on would be so cheap if it weren't for relatively free trade? try buying a Dell in North Korea or Cuba, or a beer in tokyo.
22 posted on 3/5/02 9:02 AM Pacific by RedhairRedhair
This is the right move. Its not protectionism or subsidy, but a reaction to illegal dumping, to foreign-gov't subsidized predatory pricing. This isn't a restriction of the free market, but rather an attempt to stop the circumvention of the free market by foreign governments.
Another word for dumping is price war....which is a fact of life in a competitive economy Remember that these companies who are selling steel below cost are losing money, so they can't do it forever.....and if they could, more power to them. NEWS FLASH - dumping is great for consumers, and lower steel prices means everything is cheaper, helping the economy grow faster and making everyone better off. If toyota was dumping new 4-runners for $5,000, would I complain? hell no I'd go buy one.
23 posted on 3/5/02 9:07 AM Pacific by Diddle E. Squat
I'm a free-marketer too, but I insist on it being a two-way street.
Up until 2 years ago, I was in management in a Jap auto supplier company located in Tennessee. I saw every day the ways in which Japanese companies worked to evade U.S. laws on everything from income taxes and property taxes to import duties and fair pricing of imported goods. To the Japanese, you're only "wrong" if you get caught.Steel is a perfect example: we bought Japanese steel from Japanese companies at a considerably lower price than our own parent company could buy the same steel in Japan.
That, gentlemen, is called dumping.
How was this done? The Japanese government provides their steel companies with massive tax breaks, because they know the importance to national security of having a viable steel industry.
And because they don't blindly believe everything the Wall Street Journal writes.
25 posted on 3/5/02 9:15 AM Pacific by Redbob
I will close with this: the fact that the U.S. has historically favored free trade has given us the most dynamic economy in the world, and thanks to that I'm sitting here typing this message while getting paid for it rather than working in a coal mine or farming potatos. If you think protectionism is good for jobs or economic growth you should go visit Russia, India, North Korea, or Cuba.
test
Thanks
The red line shows what the equivalent tariff rate would have been if applied to ALL imported goods.
That's a load of BS. It's not exclusively because of labor wages. If it was the auto industry in the U.S. would be in the crapper as well. Environmental nazi's and the federal government have made it impossible for the steel companies to build new mills while at the same time allowing foreign companies to dump steel here.
Here's part of an e-mail you may find interesting.
"The major offenders are countries like Korea, Brazil, Japan(more so before than now), and China who have very poor currencies and need American dollars much more than a paid work force. These countries in general also get heavy government subsidies, where rather than run insane wellfare programs they pay the steel industries to hire more people (cheap labor when it not only cost you nothing, but puts money in your pocket).
.....it's difficult to rebuild a scorned vendor base. Not to mention the blast furnaces. When they go down it takes months to get them back up unless they've been hot idled (not likely without any money). If a blast furnace freezes over the shit at the bottom has to be dynamited out. Then religning is essentially the same as building a new one. The only reason you don't build a new one is because it then has to follow the latest environmental laws (impossible)."
Do you mean this nonsense?
"If I had the time I would plot the historical relationship between tariff rates and GDP (U.S. or world) or GDP growth. Notice the very high tariff rates right before the Great Depression (hmmmmmm.....interesting)."Imports formed only 6 percent of the GNP. With average tariffs ranging from 40 to 60 percent (sources vary), this represents an effective tax of merely 2.4 to 3.6 percent. Yet the Great Depression resulted in a 31 percent drop in GNP and 25 percent unemployment. The idea that such a small tax could cause so much economic devastation is too far-fetched to be believed.
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