Word: steels
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Other critics point out that U.S. steel producers have enjoyed varying degrees of import protection for decades. If tariffs and quotas were a formula for success, U.S. mills should already be world beaters. Instead of investing in new equipment and improving worker efficiency, too many U.S. mills and their unions have used artificially high steel prices as an invitation to pocket more in profits, pay and benefits than their competitors abroad--or their customers at home--have done. "Between 1972 and 1981, when import controls were severe, steel wages rose 179% while productivity declined," Goodrich and Gary Hufbauer, also...
...Ohio factory, Bill Sopko anxiously awaits the President's ruling. An independent who voted for Bush, he would love to buy American, and until recently he did, sourcing his steel from a mill just 12 miles away. But that mill, owned by LTV, shut down last year. No other U.S. mill made the high-strength, low-alloy grade of steel that Sopko's client demanded. So Sopko started buying steel made in Europe by Arcelor and Corus...
...employees. Today, he says, his shop is operating at break-even. Sopko has applied for an exemption from whatever tariffs or quotas Bush may impose, but he's not confident of winning it. More than 1,000 other businesses have applied for exemptions for highly specialized steel products not made in the U.S. The Administration hasn't yet determined the standard under which it might grant those requests, and the steel industry will have a say. Says Bethlehem's Miller: "If we exempt everyone, we might as well not bother with the remedy." According to Sopko, his clients aren...
This sort of unintended consequence is one of the classic arguments against trade protection. Consider that if the U.S. blocks steel imports from Brazil, that country could retaliate with duties on its imports of U.S. coal, throwing West Virginia miners out of work. Higher domestic steel prices could also push users to move their factories overseas; finished goods would then be exported to the U.S., circumventing tariffs on raw steel products. "My company will be at a competitive disadvantage," says Gary Hill, president of National Metalwares in Aurora, Ill. Hill's firm, small and privately held, makes school furniture...
Other small firms are worried that their exports will evaporate. At the Boiler Tube Co. of America, based in Lyman, S.C., steel accounts for about 60% of the cost of its parts for industrial boilers. The company buys most of its steel--including stainless steel and specialized pressure tubing--from overseas suppliers such as Germany's Bentler, and for some alloys the cost is 40% less than for domestically produced steel. Higher steel costs could erode Boiler Tube's exports, which account for about 10% of its $40 million to $50 million in annual revenues, and may encourage foreign suppliers...