2002 United States steel tariff
On March 5, 2002, U.S. President George W. Bush placed tariffs on imported steel. The tariffs took effect March 20 and were lifted by Bush on December 4, 2003. Research shows that "the costs of the Safeguard Measures [steel tariffs] outweighed their benefits in terms of aggregate GDP and employment".[1]
The tariff
The temporary tariffs of 8–30% were originally scheduled to remain in effect until 2005. They were imposed to give U.S. steel makers protection from what a U.S. probe determined was a detrimental surge in steel imports. More than 30 steel makers had filed for bankruptcy in recent years. Steel producers had originally sought up to a 40% tariff. Canada and Mexico were exempt from the tariffs because of penalties the United States would face under the North American Free Trade Agreement (NAFTA). Additionally, some other countries such as Argentina, Thailand, and Turkey were also exempt. The typical steel tariff at the time was usually between zero and one percent, making the 8–30% rates seem exceptionally high. These rates, though, are comparable to the standard permanent U.S. tariff rates on many kinds of clothes and shoes.
The Bush administration justified the tariffs as a safeguarding response, namely that the US steel industry had to be protected against sudden surges of imports of steel.[2][3]
Political response in the United States
Both the issuing and the lifting of the tariffs caused controversy in the United States. Some of the president's political opponents, such as Democratic House Representative Dick Gephardt, criticized the plan for not going far enough. For some of the president's conservative allies, imposing the tariff was a step away from Bush's commitment to free trade. Critics also contended that the tariffs would harm consumers and U.S. businesses that relied on steel imports, and would cut more jobs than it would save in the steel industry. Supporters of the tariffs believed that U.S. steel producers were being harmed by a "surge" of steel imports endangering the viability of American steel companies.
There was a widespread belief on all sides of the debate, confirmed by top Bush administration officials, that politics played a role in the decision to impose tariffs.[4] Namely, the steel-producing swing states of Pennsylvania, Ohio and West Virginia would benefit from the tariffs.[5] However, steel-using states, such as Tennessee and Michigan were harmed by the tariffs.[5] The placement of the tariffs was an odd one for Bush, who had signed numerous free trade agreements during his term in office[citation needed]. This was widely believed[by whom?] to be a calculated political decision, insofar as the localities that stood to benefit were marginal ones. Both the George H. W. Bush administration and the Reagan administration also imposed import limits on steel.[citation needed]
A 2005 study found that in coverage of the tariffs in the New York Times and Wall Street Journal, there were more sentences devoted to the negative impacts of steel tariffs than sentences on the benefits.[6] The authors argue that this is consistent with a model whereby "more newspaper space would be devoted to the costs of steel tariffs—which are widely dispersed—than to their benefits—which are narrowly targeted."[6]
International response
The tariffs ignited international controversy as well. Immediately after they were filed, the European Union announced that it would impose retaliatory tariffs on the United States, thus risking the start of a major trade war. To decide whether or not the steel tariffs were fair, a case was filed at the Dispute Settlement Body of the World Trade Organization (WTO). Japan, Korea, China, Taiwan, Switzerland, Brazil and others joined with similar cases.
On November 11, 2003, the WTO came out against the steel tariffs, saying that they had not been imposed during a period of import surge—steel imports had actually dropped a bit during 2001 and 2002—and that the tariffs therefore were a violation of America's WTO tariff-rate commitments. The ruling authorized more than $2 billion in sanctions, the largest penalty ever imposed by the WTO against a member state, if the United States did not quickly remove the tariffs.[7] After receiving the verdict, Bush declared that he would preserve the tariffs.[8] In retaliation, the European Union threatened to counter with tariffs of its own on products ranging from Florida oranges to cars produced in Michigan, with each tariff calculated to likewise hurt the President in a key marginal state. The United States backed down and withdrew the tariffs on December 4.[9]
The early withdrawal of the tariffs also drew political criticism from steel producers and supporters of protectionism. The move was cheered by proponents of free trade and steel importers. When he lifted the tariffs, Bush said, "I took action to give the industry a chance to adjust to the surge in foreign imports and to give relief to the workers and communities that depend on steel for their jobs and livelihoods. These safeguard measures have now achieved their purpose, and as a result of changed economic circumstances it is time to lift them".[9]
Impact
In September 2003, the U.S. International Trade Commission (ITC) examined the economic effects of the Bush 2002 steel tariffs. The economy-wide analysis was designed to focus on the impacts that arose from the relative price changes resulting from the imposition of the tariffs, and estimated that the impact of the tariffs on the U.S. welfare ranged between a gain of $65.6 million (0.0006% of GDP) to a loss of $110.0 million (0.0011% of GDP), "with a central estimate of a welfare loss of $41.6 million." A majority of steel-consuming businesses reported that neither continuing nor ending the tariffs would change employment, international competitiveness, or capital investment.[10]
According to a 2005 review of existing research, all studies on the tariffs "find that the costs of the Safeguard Measures outweighed their benefits in terms of aggregate GDP and employment as well as having an important redistributive impact."[1]
Steel production rose slightly during the period of the tariff.[11] The protection of the steel industry in the United States may have had unintended consequences and perverse effects. A study from 2003 that was paid for by CITAC (Consuming Industries Trade Action Coalition), a trade association of businesses that use raw materials, found that around 200,000 jobs were lost as a result.[12][13]
The U.S. International Trade Commission noted that although the CITAC study did estimate the impact of changing steel prices, it did not specify how much of the impact was attributable directly to the steel tariffs. The study reported estimated impact, relying on specific assumptions made to make analysis simpler. The ITC also noted that, within the broad definition of "steel-consuming industries" used in the CITAC study, employment actually increased by almost 53,000 between March 2002 and December 2002, and that employment in the same industries had fallen by 281,000 from March to December 2001, prior to the tariffs. On the other hand, the ITC admitted that the authors of the CITAC study had controlled for changes in overall manufacturing employment, and also admitted that the CITAC study's estimate of job loss in the steel-consuming sector was only half that reported by steel-consuming firms themselves in answers to questionnaires sent by the ITC, and only one-fifth that reported by the Bureau of Labor Statistics for the sector during the same period.[10]
See also
- Trump tariffs beginning 2018
- China–United States trade war
References
- ^ a b Read, Robert (2005-08-01). "The Political Economy of Trade Protection: The Determinants and Welfare Impact of the 2002 US Emergency Steel Safeguard Measures" (PDF). World Economy. 28 (8): 1119–1137. doi:10.1111/j.1467-9701.2005.00722.x. ISSN 1467-9701. S2CID 154520390.
- ^ Becker, Elizabeth (2003-11-11). "U.S. Tariffs on Steel Are Illegal, World Trade Organization Says". The New York Times. ISSN 0362-4331. Retrieved 2018-03-23.
- ^ Ho, Kevin (2003). "Trading Rights and Wrongs: The 2002 Bush Steel Tariffs". Berkeley Journal of International Law. doi:10.15779/z38p64v.
- ^ Rich, Jennifer L. (March 14, 2002). "U.S. Admits That Politics Was Behind Steel Tariffs". The New York Times.
- ^ a b Tran, Mark (2003-11-11). "US steel tariffs". the Guardian. Retrieved 2018-03-23.
- ^ a b Kuzyk, Patricia; McCluskey, Jill J.; Dente Ross, Susan (2005-12-01). "Testing a Political Economic Theory of the Media: How Were Steel Tariffs Covered?". Social Science Quarterly. 86 (4): 812–825. doi:10.1111/j.0038-4941.2005.00357.x. ISSN 1540-6237.
- ^ Ackman, Dan (November 11, 2003). "Ineffective Steel Tariffs Now Illegal, Too". Forbes.
- ^ "US rejects WTO ruling; trade war looms". Rediff. November 11, 2003.
- ^ a b Tran, Mark (December 4, 2003). "Bush lifts steel tariffs to avert trade war". The Guardian.
- ^ a b United States International Trade Commission (September 2003). "Volume III: Executive Summaries and Investigation No. 332-452 (Report and Appendices)." Monitoring Developments in the Domestic Industry (Investigation No. TA-204-9) and Steel-Consuming Industries: Competitive Conditions with Respect to Steel Safeguard Measures (Investigation No. 332-452). (Publication 3632). Washington DC. Retrieved March 5, 2018. For impact on U.S. welfare see p. ix. For impact on steel consumers see p. viii. For discussion of CITAC study see p. 2-61-62 and F-3-5.
- ^ "Industrial Production: Durable Goods: Raw steel" (HTML). Federal Reserve of St. Louis. January 1972. Retrieved March 1, 2018.
- ^ Committee on Small Business; House of Representatives; 107th United States Congress (July 23, 2002). "The Unintended Consequences of Increased Steel Tariffs on American Manufacturers". Washington DC: U.S. Government Printing Office. Retrieved October 26, 2014.
Serial No. 107–66
- ^ Francois, Dr. Joseph; Baughman, Laura M. (February 4, 2003). "The Unintended Consequences of U.S. Steel Import Tariffs: A Quantification of the Impact During 2002" (PDF). Washington DC: CITAC Foundation/Trade Partnership Worldwide, LLC. Retrieved October 26, 2014.
External links
- White House statement announcing tariff
- White House statement announcing end of tariff
- v
- t
- e
- Transition
- 1st inauguration
- 2nd inauguration
- Timeline
- 2001
- 2002
- 2003
- 2004
- 2005
- 2006
- 2007
- 2008–09
- Legislation and programs
- Dismissal of U.S. attorneys controversy
- Email controversy
- Shoeing incident
- Judicial appointments
- Pardons
- Impeachment efforts
- Executive orders
- Presidential proclamations
- Obama transition
Speeches |
---|
- Bush Doctrine
- International trips
- Jordan–United States Free Trade Agreement
- Trade Act of 2002
- 2002 steel tariff
- Darfur Peace and Accountability Act
- Mexico City policy
- PEPFAR
- Space policy
- Slovenia Summit 2001
- Slovakia Summit 2005
- Strategic Offensive Reductions Treaty
- USA Freedom Corps
- September 11 attacks
- War on terror
- 2001 AUMF
- Afghanistan War
- 2002 Iraq AUMF
- Iraq War
- financial cost
- 2008 Iraq SOFA
- Executive Order 13355
- Executive Order 13470
- H-1B Visa Reform Act of 2004
- L-1 Visa Reform Act of 2004
- Secure Fence Act of 2006
- Foreign Investment and National Security Act of 2007
- Adam Walsh Child Protection and Safety Act
- Amber alert
- Bipartisan Campaign Reform Act
- Born-Alive Infants Protection Act
- Emmett Till Unsolved Civil Rights Crime Act
- Genetic Information Nondiscrimination Act
- Government response to September 11 attacks
- Rescue and recovery effort
- 9/11 Commission
- report
- criticism
- National Construction Safety Team Act
- NIST WTC Disaster Investigation
- Patriot Act
- President's Surveillance Program
- Terrorist Surveillance Program
- NSA warrantless surveillance
- Homeland Security Act of 2002
- U.S. Department of Homeland Security
- National Security Entry-Exit Registration System
- No Fly List
- Secondary Security Screening Selection
- Terrorist Screening Center
- Terrorist Screening Database
- Real ID Act
- Protect America Act of 2007
- FISA Amendments Act of 2008
- Help America Vote Act
- Higher Education Opportunity Act
- Higher Education Relief Opportunities For Students Act
- Hurricane Katrina
- Medicare Modernization Act
- No Child Left Behind Act
- Partial-Birth Abortion Ban Act
- President's Council on Service and Civic Participation
- Prison Rape Elimination Act of 2003
- Public Service Loan Forgiveness
- Unborn Victims of Violence Act
- 2006 VRA Amendments
- White House Office of Faith-Based and Neighborhood Partnerships
- American Jobs Creation Act of 2004
- Bush tax cuts
- Consumer Product Safety Improvement Act
- Credit Rating Agency Reform Act
- Economic Stimulus Act of 2008
- Energy Policy Act of 2005
- Energy Independence and Security Act of 2007
- Fair and Accurate Credit Transactions Act
- Farm Security and Rural Investment Act of 2002
- Flood Insurance Reform Act of 2004
- Food, Conservation, and Energy Act of 2008
- Job Creation and Worker Assistance Act of 2002
- Mortgage Forgiveness Debt Relief Act of 2007
- Pension Protection Act of 2006
- Public Law 110-343
- Renovation, Repair and Painting Rule
- SAFE Transportation Equity Act
- Sarbanes–Oxley Act
- Tax Increase Prevention and Reconciliation Act of 2005
- Tax Relief and Health Care Act of 2006
policy