NCPA - National Center for Policy Analysis

Arguments Against Import Quotas For Steel

March 16, 1999

Some analysts are calling efforts to cap steel imports at 1997 levels -- a proposal which the House is scheduled to vote on tomorrow -- the most radical American protectionist act since the Smoot-Hawley Act.

Free-traders contend there is no domestic steel crisis.

  • They argue that the decline in steel shipments in the last half of 1998 can be traced in part to the 54-day General Motors strike -- since the auto maker buys about 99 percent of its steel from U.S. producers.
  • U.S. steel production last year of 102 million tons was only slightly below 1997's record of 105 million tons -- and for much of 1998 there was actually a steel shortage.
  • The reason steel industry employment has been falling since at least the early 1980s isn't due to imports, but to productivity-enhancing investment in the steel industry -- which means it takes fewer workers to produce more steel.
  • Since U.S. producers can satisfy only about three-fourths of domestic steel demand, import restraints will mean that American steel users will pay higher prices than their foreign competitors, hurting U.S. sales abroad.

Source: Editorial, "They're Baaaack!" Wall Street Journal, March 16, 1999.


Browse more articles on Economic Issues