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Thursday, September 18, 2003

Steel Tariffs Bite Back

Mike Allen and Jonathan Weisman write in Friday's WaPo that the Bush administration's steel tariffs have backfired:

"Some economists say the tariffs may have cost more jobs than they saved, by driving up costs for automakers and other steel users. Politically, the strategy failed to produce union endorsements and appears to have hurt Bush with workers in Michigan and Tennessee -- also states at the heart of his 2004 strategy."

Now, the article claims, there exists the possibility that the tariffs will be repealed or strongly lessened:

"The issue is being brought to a boil by the scheduled release today of voluminous progress reports by the U.S. International Trade Commission. The ITC's mid-session assessment of the three-year tariff program's impact will examine not only the tariffs' effects on the steel industry but also on the hard-pressed manufacturers that shape steel into products.

"White House officials said Bush will not make a decision until he has digested the ITC reports. But his top economic advisers have united to recomend that the tariffs be lifted or substantially rolled back this fall, and several administration officials said it is likely he will go along. The retreat would roil the political and economic landscape of the Rust Belt, where both parties expect the presidential election to be won and lost."

The article goes on to discuss the cynical way the advisors to the president went about deciding to impose the tariffs last year.

I am heartened by the possibility that tariffs will turn around to be not just an economic loser but also a political loser this time around. Hopefully the steel tariffs will end up serving as a cautionary tale for future politicians, making them more reluctant to impose protections the next time an industry comes asking for trade barriers.