WASHINGTON – The Bush administration announced Tuesday that the United States would impose tariffs of up to 30 percent on steel imports in a decision aimed at helping the ailing U.S. steel industry and certain to anger major U.S. trading partners in Europe and Asia.
The long-awaited tariff-and-quota plan is a three-year deal that can be amended by President Bush if the steel industry's financial crisis worsens or improves.
"This relief will help steelworkers, communities that depend upon steel, and the steel industry adjust without harming our economy," Bush said in a statement on the duties on 10 steel products.
The duties, ranging from 8 percent to 30 percent, take effect on March 20 and cover flat-rolled steel and other steel product imports from a long list of countries, including Brazil, South Korea, Japan, Russia, Germany, Turkey, France, China, Australia and the Netherlands. The tariffs, which vary by product line, would stay in place for three years.
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.
Canada and Mexico Exempt
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.
White House officials provided details of the plan, including:
--Tin mill steel, a 30 percent tariff.
--Flat steel products including cold-rolled, plate-rolled and coated sheet steel, 30 percent.
--Hot-rolled bar and cold-finished bar, 30 percent.
--Carbon and alloy fitting and flanges, used in car production, 13 percent.
--Circular welded tubular products, 15 percent.
--Stainless steel bar, 15 percent.
--Stainless rod, 15 percent.
--Stainless steel wire, 8 percent.
--Slab steel would get a 30 percent tariff, but only after the first 5.4 million short tons are imported.
The list reflects the political ramifications of Bush's decision.
Tin mill steel is the type produced by Weirton Steel, one of the biggest employers in West Virginia. Bush won the state in an upset victory over Vice President Al Gore in 2000 largely on his promise to protect the steel industry.
The auto industry is one of many U.S. manufacturers depending on cheap steel and did not want high tariffs. The car industry uses lost of steel flanges.
Steel industry lobbyists pushed hard for the highest possible tariff on slab steel, produced by smaller West Coast companies. Bush's split-the-difference approach calls for tariffs but only after a certain amount of the product is imported.
Anger in EU, Asia
The European Union and steel producers around the world cautioned that relations with the United States would suffer under such a tariff decision and hinted at possible trade retaliation against American products.
European Commission President Romano Prodi wrote to the administratioon Monday, expressing serious concern and urging Washington against measures to close the steel market.
The EU reaction echoed anger in Asia, but it is particularly crucial because the EU and the United States, which have the world's biggest trade relationship, are the only two major steel import markets.
Germany, the EU's biggest steel producer, and Sweden said the EU should take Washington to the World Trade Organization (WTO) if it imposed tariffs to protect its steel industry and staunchly pro-American Britain wrote to Bush adding its concern.
Russia warned that a tariff "could have a serious impact on the atmosphere of Russian-American relations."
The Korean steel industry, which exported 2.1 million metric tons to the United States last year, said the tariff would affect 80 percent of all U.S. steel imports.
That would also hit Japan, which exported 2.2 million metric tons of steel to America last year and is facing a slump in demand for steel in its recession-bound economy. Tokyo joined a chorus of countries threatening to take the United States to the WTO.
Both the EU and United States import a lot of steel but European exports dwarf those of the American industry. EU steel imports of 25.4 million metric tons from around the globe exceeded exports by only 2.25 million metric tons. By contrast, U.S. steel imports of 38 million metric tons exceeded exports by 31.4 million metric tonnes.
The problem is exacerbated by the relative strength of the dollar against the euro, which makes American exports more expensive than those of European competitors.
Lobbyists Pushed Hard
Steel industry lobbyists pushed hard for the highest possible tariff on slab steel, produced by smaller West Coast companies. Bush's split-the-difference approach calls for tariffs but only after a certain amount of the product is imported.
The industry had hoped that Bush would set a low quota, allowing for a quick kick-in of tariffs. It was not immediately clear how Bush's quota of 5.2 million short tons compares to current import levels.
In settling on a range of 8 percent to 30 percent, Bush split the difference while acting on a recommendation by the U.S. International Trade Commission that he impose tariffs between 20 percent and 40 percent.
Bush decided not to embrace the industry's request for a $10 billion bailout of pension and health care costs for retirees of bankrupt steel companies, according to those familiar with his decision. The president left the door open for Congress to look at finding ways of providing health care protection for retirees of bankrupt companies in general, not only those in the steel industry, the officials said.
However, the decision not to pick up these so-called "legacy costs" appeared to torpedo a proposed consolidation within the steel company. US Steel, the nation's largest steel maker, had said it would buy four companies that had filed for bankruptcy protection if the government picked up the costs.
More than 30 steel makers have declared bankruptcy in recent years and the price of basic steel has fallen dramatically. How to protect the industry without hurting the economy with steep price increases is a question that could sway congressional races in November, and even affect Bush's prospects for re-election in 2004.
The Associated Press contributed to this report.
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