December 07, 2003

Declare Victory and Go Home

The Economist summarizes the story of the Bush administration steel tariffs:

Economist.com | America's steel tariffs: ...On Thursday December 4th, however, the president's fight came to an end with the announcement that the [steel] tariffs were being dismantled, 16 months earlier than originally planned. But this was no defeat, you understand. On the contrary, Mr Bush has, in effect, declared victory and gone home. What kind of victory can he claim? In the 20 months since the tariffs were imposed, the steel industry has consolidated.... The industry's largest union, the United Steel Workers of America, has agreed to more flexible work practices, profit-sharing and even some redundancies.... All of this has happened since the tariffs were introduced, but did any of it happen because they were introduced? Gary Clyde Hufbauer of the Institute for International Economics (IIE), a Washington think-tank, warns against the post hoc ergo propter hoc fallacy. That won't bother Mr Bush, who is not known for his command of Latin.... [T]he tariffs simply delayed the inevitable. By artificially raising the price of steel, they added to the profits of ailing firms, making them more expensive to acquire.... The trade barriers Mr Bush repealed on Thursday were a comfort blanket, not a spur, for the industry.

Posted by DeLong at December 7, 2003 07:59 AM | TrackBack

Comments

Third or fourth post on this? You do agree that scrapping the tariffs was the right thing to do, correct?

Posted by: Marc M on December 7, 2003 08:23 AM

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