Presidential advisers urge Bush to drop steel tariffs
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Longshore workers prepare to unload the first shipload of unprocessed steel at the BHP Coated Steel Corp. mill near Kalama, Washington, Friday.
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CNN's John King on President Bush being advised to head off a global trade war by rolling back steel tariffs.
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WASHINGTON (AP) -- White House advisers are urging President Bush to head off a global trade war by rolling back steep tariffs on imported steel, administration and industry officials said Monday.
If he concurs -- he is still reviewing the matter, the White House spokesman said -- Bush risks alienating steel companies and workers in states that are important for his re-election. If he doesn't, a broad range of U.S. products could face retaliatory sanctions from Europe and elsewhere, angering other voters.
A senior Bush adviser, speaking on condition of anonymity, said several key aides and agencies, including the office of the U.S. trade representative, have urged the president to drop the tariffs, imposed in March 2002 to ease foreign competition while the beleaguered U.S. steel industry consolidates and restructures.
"The EU gets what it wanted," said a steel industry official on Monday, even as the European Union renewed its threat to slap $2.2 billion in retaliatory sanctions on U.S. exports if the tariffs are not eliminated by December 10.
But White House spokesman Scott McClellan said the president had not made a final decision on the tariffs, which range from 8 percent to 30 percent on certain kinds of foreign-made steel and are currently set to expire in March 2005.
The administration is still reviewing various options, said Richard Mills, spokesman for U.S. Trade Representative Robert Zoellick.
"We feel it's got to come from the president. It's unofficial until it does," said Rep. Joe Knollenberg, R-Michigan, a leading voice on Capitol Hill to repeal the tariffs.
Since they were enacted last year, the tariffs have served as a flashpoint for global trade tensions that also had unintended consequences in this country, for steel consumers in key political states.
Bush imposed the tariffs and fulfilled a 2000 campaign promise to traditionally Democratic voters in West Virginia, Ohio and Pennsylvania -- three states the White House hopes to win in 2004.
But foreign trading partners almost immediately protested, leading the World Trade Organization earlier this year to declare that the sanctions violate global trade rules.
At the same time, the auto industry and other steel consumers in Michigan, Minnesota and Wisconsin complained the tariffs hiked steel prices just as small manufacturing companies were being hit by the slumping economy.
"The last thing our economy needs right now is a trade war, and that's exactly what we would have gotten had the steel tariffs remained in place," Rep. Jeff Flake, R-Arizona, a free-trade advocate, said Monday.
"We shouldn't set aside our free trade principles to satisfy a small political constituency," Flake said.
Bush is expected to announce his decision later this week, after he completes a fund-raising swing to Michigan and to Pittsburgh -- America's "Steel City." The anticipated $1 million Pittsburgh fund-raiser Tuesday is being co-hosted by U.S. Steel Corp. Chairman and CEO Thomas J. Usher, who said Monday he remained hopeful the tariffs would remain in place.
"To remove these and to buckle under to the Europeans would be a mistake -- not only for steel but for manufacturing in general," Usher said. "In my opinion, the president has done an awful lot of right things, and my expectation is that he will see the right of this."
"I'm a natural optimist -- that's what you have to be in the steel business," Usher added.
Industry insiders believed a small number of tariffs might be left in place on specialty steel products. But even that was beginning to look less likely Monday.
European Union spokeswoman Arancha Gonzalez in Brussels, Belgium, said the 15-nation trading bloc would retaliate if the tariffs were not completely abolished, as demanded by the WTO.
"The U.S. knows this," Gonzalez said.
Yet rolling back the tariffs could also incite a backlash from Republican lawmakers -- including Senate Steel Caucus Chairman Arlen Specter of Pennsylvania and House Administration Committee Chairman Bob Ney of Ohio -- who urged Bush to stay the course on the three-year tariffs program.
Without the tariffs, they said, low-priced foreign steel will again flood the U.S. market, potentially eliminating thousands of steel jobs. Forty-one steel companies have declared bankruptcy since 1997, erasing more than 50,000 jobs.
"And if George W. Bush decides to roll back the tariffs, this union will work very hard in West Virginia, eastern Ohio and western Pennsylvania to make sure George W. Bush joins the thousands of steelworkers on the unemployment line come 2004," said Dave Gossett of the Weirton, West Virginia-based Independent Steelworkers Union.
But if the tariffs remain in place, steel consumers are likely to face a supply shortage, said Lew Leibowitz, attorney for the Consuming Industries Trade Action Coalition. CITAC opposes the tariffs.
"I can't find anyone who believes that the tariffs are going to be continued," said Leibowitz. "We're beginning to get a little optimistic."
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