NCPA - National Center for Policy Analysis

Steel Tariffs Set In Motion Downhill Trade Slide

May 10, 2002

President Bush's decision to impose higher tariffs on imported steel has invited retaliation from the European Commission and Japan -- and imperiled his free trade agenda in other areas.

Here are some of those costly consequences:

  • The EU is threatening retaliatory tariffs of 100 percent on a 22-page list of goods ranging from rice to grapefruit to shoes, brassieres, nuts, bib-overalls, billiard tables and ballpoint pens.
  • The U.S. International Trade Commission has just voted to hit imported lumber with duties averaging 27 percent -- a direct slap at Canada.
  • The new lumber tariff will add from $1,000 to $1,500 to the price of a new home -- and experts estimate it will price as many as 450,000 American families out of the housing market.
  • Steel-exporting Russia has already retaliated by fencing out U.S. chicken.

Moreover, all those subsidies in the new farm bill have inspired Brazil and Australia to promise to challenge the U.S. before the World Trade Organization.

The steel tariffs, combined with those farm subsidies, have emboldened Democrats on Capitol Hill to adopt new anti-trade strategies, such as considering an amendment to fast track authority that would allow Congress to defeat individual parts of trade deals at a later date - thus gutting the President's trade power. If Congress can later veto the parts it doesn't like, no nation will ever give away anything difficult, observers add.

Source: Editorial, "Downhill on Trade," Wall Street Journal, May 10, 2002.


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