Carlos Tejada of the Wall Street Journal on steel tariffs:
WSJ.com - Bush Weighs Softer Stance on Steel: A day after the World Trade Organization ruled against President Bush's tariffs on imported steel, the administration is reluctantly considering whether some compromise could satisfy its trade partners and the domestic steel industry.... Steel lobbyists in Washington acknowledged that the tariffs are likely to be reduced, if not eliminated -- despite the White House's initially defiant stance.... Bush officials said they are looking at their options.... The Bush economic team has backed the idea that the protections should be lifted in some fashion. There are also indications that Karl Rove, Mr. Bush's top political adviser, has had a change of heart about the tariffs as well. Mr. Rove was an influential voice in the initial decision to impose the tariffs in March 2002, but now sees them as more of a liability than a benefit, said one person familiar with administration thinking on the issue. Simply eliminating the protections, though, would provoke a harsh response from steelmakers and their tens of thousands of employees. Administration officials, looking toward next year's election, have little desire to whip up opposition in key steel states like Pennsylvania and Ohio... (November 12).
WSJ.com - Steel Tariffs Resist An Easy Solution: Mr. Bush told reporters last week that he would make a decision on the tariffs "within a reasonable period of time." He said the U.S. steel industry had been harmed in the past. "Therefore, I imposed some tariffs in order to allow for a restructuring of the industry," he said. "I'm in the process of reviewing the extent to which the industry has been restructured."... (November 17)
WSJ.com - Steel Companies Back Early End of Tariffs: U.S. steelmakers reluctantly agreed to end tariffs on steel imports earlier than scheduled, after the White House urged the companies to seek middle ground and help it avert a threatened trade war. But... European trade officials have shown little interest in compromising on the levies, which the World Trade Organization last week ruled were illegal. U.S. steel consumers, including automotive-parts makers, also aren't likely to be impressed by the compromise proposal. People close to the deliberations of the steelmakers say the industry agreed Friday to a deal that would allow the White House to roll back the three-year tariffs on a wide variety of steel products before their original expiration date in March 2005. Instead, the tariffs, which were intended to help the U.S. steel industry right itself, would end in the autumn of 2004... (November 18)
WSJ.com - Bush Is Expected To End Steel Tariffs: President Bush is widely expected to end U.S. tariffs on imported steel as early as this week in a move that could anger steelmakers and their employees, but calm fears of a looming trade war.... Bush aides have told company representatives... the administration plans to avoid the retaliatory tariffs.... The president enacted the tariffs in March 2002 to allow time for the weakened U.S. steel industry to consolidate and restore profitability.... [T]op White House advisers are recommending that President Bush roll back steep tariffs on foreign-made steel to avoid a global trade war.... Asked if the tariffs would be lifted, the industry official said, "Absolutely, that is for sure.... The EU gets what it wanted," he said.... Bush has little to gain politically by keeping the tariffs.... Few steel executives ever expected the protections to last the full three years... the landscape has changed considerably since they were imposed.... Keeping the tariffs... punitive duties on... clothing to orange juice and motor boats... Florida and the Carolinas... dent the economic recovery... fomenting a trade war would rattle investor confidence... (December 1)
I had never heard the line that "few steel executives ever expected the protections to last the full three years" until the Wall Street Journal's December 1 article. I wonder who made it up, and when?
I had also never heard the claim that the need for the tariffs had passed--that the steel industry had successfully "consolidated" until last month. Certainly the CEOs of U.S. Steel, Nucor, and Weirton do not agree.
Posted by DeLong at December 2, 2003 02:01 PM | TrackBack
war is peace, slavery is freedom, steel industry has consolidated.
Posted by: Mats on December 2, 2003 02:29 PMWhat a sorry chapter. Mr. Bush helped steel but really hurt mfg. Predictions are that jobs in MI and other Mfg states will not return to 2000 levels until 2009. The steel tariffs sped the process of moving steel mfg offshore.
It did not have to be that way. Other ways of helping the steel industry could have included more money for infrastructure that utilized steel with a mandate to use American produced steel. The other would be to pick up some of the health care burden from the industry.
Recently, Mr. Ford came out in support of a national health care. As he put it, his competitors making cars overseas all hire workers whose health care costs are covered by their governments. It makes it difficult for Ford to compete. This would help US competitiveness in areas in addition to steel.
There are several, legitimate ways of throwing bones to the steel dinosaurs without hurting everyone else. This administration is too deaf and too dumb to get it.
Posted by: bakho on December 2, 2003 02:31 PMBush showed no conviction today by going before US Steel for a fundraiser and not even mentioning the pending decision about the steel tariffs. The news that the administration was probably dropping the tariffs appeared in the papers yesterday, but then the White House backed off, not wanting to cause embarrassment during today's visit. Now we know Bush is brave enough to go to Baghdad for a few hours but not brave enough to go before steel interests and tell them why the tariffs they support are bad economic policy.
Brad's post is implying that WSJ's coverage has evolved over time so as to make the Bush decision to drop the tariffs look like a reasonable change in policy. I expect we'll hear more generic statements like today's out of Bush--he'll be sure to cite yesterday's manufacturing report--to the effect that the economy is strong and growing and so the tariffs aren't needed.
I agree with bakho on the need for universal healthcare, though I don't expect George Bush to embrace such a position either. I'm more galled by the fact that a self-proclaimed "free trader" would put such a baldly protectionist policy in place and then not have the guts to defend his ostensible principles before an influential lobbying organization.
Posted by: Dimmy Karras on December 2, 2003 05:46 PMMonday's WSJ also covered the Asian view of the steel tariffs. When you roll this issue up with the administrations attempts to have China revalue the yuan - we don't come off as merely indecisive. We come off totally hat-in-hand and indecisive.
Right now along the Pacific Rim the US looks pretty hapless.
Posted by: pops on December 2, 2003 07:06 PMMonday's WSJ also covered the Asian view of the steel tariffs. When you roll this issue up with the administration's attempts to have China revalue the yuan - we don't come off as merely indecisive. We come off totally hat-in-hand and indecisive.
Right now along the Pacific Rim the US looks pretty hapless.
Posted by: pops on December 2, 2003 07:06 PMIs Bush a dedicated free trader? Businessweek chides his administration for taking a crony approach to international trade issues.
http://www.businessweek.com/magazine/content/03_27/c3840072_mz013.htm
What gets me about the WSJ line is that Bush has little to gain politically by keeping the tariffs. Well, he pissed off steel mfg with the tariffs. Now it is too late. Even if he lifts the tariffs now, the restructuring has already taken place. Domestic mfg are still screwed. Lifting the tariffs will piss off the steel workers. (well they never really warmed to him anyway because they wanted health care not tariffs so maybe there is not that much to lose if they can hang on until 04).
Did Karl Rove outsmart himself on this issue?
Posted by: bakho on December 2, 2003 07:52 PMA pretty wall hanging that I used to give to girls to impress them reads "`When I see Lloyd-Jones in action, I say to myself this guy should be running US Steel' - Alvin Toffler"
Here one sees the short shelf life of futurists, as well as the utterly otiose quality of the notion that the steel industry is a big deal.
Still, it got me a few girls, way back when.
Ah, the old "wall hanging with a well-known writer praising one's virtues" trick. Served me well, back in the day, to get a few chickies in the sack.
Of course, my writer was Charles Dickens, and the girls were usually orphans.
Good times.
Posted by: Keith M Ellis on December 2, 2003 10:15 PMThe sidetrack topic: wallhangings and girlfriends
It probably didn't have anything to do with U.S. Steel. The girls were probably most impressed with the guy's needlepoint abilities.
Isn't it about time for Mr. DeLong to remind us (again) that Vlad the Impaler never really has been all that fond of impalements or the act of impaling?
Remember dear Leader - repetition, repetition, repetition.
Posted by: bemused on December 3, 2003 05:28 AMMr. Bush went to Steeltown and said nothing about steel. This is what he did say.
http://www.whitehouse.gov/news/releases/2003/12/20031202-5.html
Quite frankly, some of his claims do not at all reflect reality.
Posted by: bakho on December 3, 2003 06:25 AMBrad, read this quote again:
"the industry agreed Friday to a deal that would allow the White House to roll back the three-year tariffs on a wide variety of steel products before their original expiration date in March 2005. Instead, the tariffs, which were intended to help the U.S. steel industry right itself, would end in the autumn of 2004..."
And you potentially have part of the answer to your question:
"I had never heard the line that "few steel executives ever expected the protections to last the full three years" until the Wall Street Journal's December 1 article. I wonder who made it up, and when?"
As soon as the industry agreed to an Autumn 2004 end, the line "few steel executives expected the protections to last the full three years" becomes true. You get a 15 day time frame. I would imagine though that few steel executives did expect the tariffs to last the full three years. The political costs were high. I wouldn't doubt that Rove no longer believes they were worth it.
Posted by: Stan on December 3, 2003 09:01 AMNot that they are necessarily linked, today anyway, but Eur/Usd hit a new high today, after the WSJ print edition headlined "Bush Holds White House Meeting to Weigh Scrapping Steel Tariffs" after the earlier reports that it was a done deal. Certainly, the latest strength in Eur/Usd is partly related to the impression of increased trade tension betwee the US and Europe. Maybe a headline suggesting Bush is becoming less certain about the outcome for steel tariffs is giving Eur/Usd traders something to think about.
By the way, that impression of increased trade tension may help with the issue of another recent discussion here. Japan and China have been less strident in their threats of retaliation for US trade practices than has Europe. A traditional response in the fx market to threats of trade nonsense is to sell the dollar against the currency of whatever region is the other part to the potential fight. This time, tension with Europe seems most immediate, so Eur/Usd moves most. To the extent that tensions with Europe are escalating more than with Japan, then a rally Eur/Jpy makes sense as well. None of this is based in macroeconomics, just in making money. If a pattern is consistent (or if received wisdom n the fx market is that the pattern is consistent), then trade the pattern, without regard to what economics tells you.
Posted by: K Harris on December 3, 2003 09:28 AMBrad, read this quote again:
"the industry agreed Friday to a deal that would allow the White House to roll back the three-year tariffs on a wide variety of steel products before their original expiration date in March 2005. Instead, the tariffs, which were intended to help the U.S. steel industry right itself, would end in the autumn of 2004..."
And you potentially have part of the answer to your question:
"I had never heard the line that "few steel executives ever expected the protections to last the full three years" until the Wall Street Journal's December 1 article. I wonder who made it up, and when?"
As soon as the industry agreed to an Autumn 2004 end, the line "few steel executives expected the protections to last the full three years" becomes true. You get a 15 day time frame. I would imagine though that few steel executives did expect the tariffs to last the full three years. The political costs were high. I wouldn't doubt that Rove no longer believes they were worth it.
Posted by: Stan on December 3, 2003 09:29 AMHa ha ha ha ha!!! I think Canada should take the EU's lead and start a trade war over lumber, cattle and wheat. All we've got to do is cutoff the flow of natural gas and electricity and Bush will bend! BTW do you know that right now housing costs are 10-15% higher than they should be because of lumber tarifs on Canadian lumber? Have fun paying for some lumber company's CEO salary!
Posted by: K on December 4, 2003 09:02 AM