Steel Tariff Removal Opens Electoral Struggle

President Bush's decision to repeal the steep steel tariffs may have avoided a global trade war, but it also opened up an electoral struggle between the steel and manufacturing industries, and the Midwest and Rust Belt states he will need to win re-election.

The Democratic presidential candidates immediately attacked the White House following Thursday's announcement, accusing Bush of selling out the domestic steel industry by caving in to international pressure.

The president also faced criticism from his own party. Rust Belt Republicans who normally back Bush declared their unhappiness in what Rep. Bob Ney (search), R-Ohio, called "bad news" and a "disappointing setback."

However, the decision endears Bush to manufacturers of automobile parts, refrigerators, door hinges and hundreds of other steel products in just-as-politically-crucial states in the Midwest that eluded him in 2000.

"There's no question it will help," said Rep. Joe Knollenberg (search), R-Mich., who represents 1,500 auto parts businesses in his district and fought to end the tariffs when they were imposed in March 2002. Bush lost Michigan in 2000 by a slim 217,000 votes out of more than 4.1 million cast.

The support from the manufacturing industry helps offset the decision's political cost in steel-producing states. The steel tariffs were already losing political value to Bush since the Steelworkers Union has already endorsed Missouri Rep. Dick Gephardt (search).

Michigan, along with Minnesota and Wisconsin, account for a total of 37 of the 270 electoral votes needed to win next year's presidential election. The key steel-producing states of Pennsylvania, West Virginia and Ohio hold 46.

Facing the threat of a trade war, Bush lifted the nearly 2-year-old tariffs but promised to continue monitoring imports vigilantly to guard against a sudden flood of foreign steel entering the country.

Bush's decision — a turnabout from his own policy — came in the face of threats by the 15-nation European Union to retaliate with $2.2 billion in duties on U.S. products such as Florida oranges and pajamas made in the Carolinas.

Analysts said the list of products was carefully chosen to put pressure on Bush; sanctions could have created significant political pain for him in next year's race.

Within minutes of Bush's decision, the EU withdrew the threat, which was based on a World Trade Organization ruling that the tariffs were illegal.

The tariffs, covering a wide range of steel products, had been scheduled to remain in effect for three years, until 2005, to give U.S. steelmakers protection from foreign competition. Bush said the tariffs had been imposed to give the domestic industry critical time to modernize and to protect jobs.

"These safeguard measures have now achieved their purpose, and as a result of changed economic circumstances, it is time to lift them," the president said in a statement.

U.S. Trade Representative Robert Zoellick (search) said that neither political calculations nor the EU threat directly contributed to Bush's order. But, Zoellick said, "the politics are part of trying to accomplish an agenda" and "this one worked out pretty darn well."

"We avoided any retaliation," he said. "We gave the industry a chance to be back on its feet. And in terms of trade negotiations, I didn't find it (had) any effect. People, of course, use excuses for whatever their position. But it didn't stop us from going ahead."

With 41 steel companies nationwide declaring bankruptcy since 1997, the tariffs are politically symbolic in states like Pennsylvania, Ohio and West Virginia, where the industry once thrived. If next year's presidential election is decided by a small margin of voters — as it was in 2000 — the tariffs may be enough to tip the balance in those swing states, said Ben Fischer, a labor relations professor at the H. John Heinz School of Public Policy at Carnegie Mellon University in Pittsburgh.

"There are a lot of people who still feel an identification to the industry," Fischer said. "I have no friends who are steelworkers, but all feel that this community somehow revolves around steel."

In 2000, Bush lost Pennsylvania by just 204,000 votes out of more than 4.7 million votes cast.

Four Democratic presidential candidates — Gephardt, Connecticut Sen. Joe Lieberman (search), former Vermont Gov. Howard Dean (search) and retired Gen. Wesley Clark (search) — accused Bush of abandoning steel producers without offering plans to retain jobs in the industry and other manufacturing sectors.

Gephardt said that "rather than bow to the pressure of our trading partners," Bush should have negotiated further with the WTO. Dean said the tariff repeal "is just another example of this administration playing politics with peoples' lives."

But even lawmakers disappointed with the repeal said Bush still could carry the Rust Belt states if the economy continues on the upswing.

"I think there would be criticism of Mr. Bush regardless of what he decided on this," said Rep. Phil English, R-Pa., who chairs the Congressional Steel Caucus and is a Bush loyalist who pushed the administration to keep the tariffs.

But, he added, "If, at the end of the day, the steel industry is revitalized and we've bounced back, and the manufacturing sector is bouncing back, then I think Mr. Bush is going to do very well."

The Associated Press contributed to this report.