Econ Unit VIII- 5 pages essay

Steel tariffs, pro and con The Washington Times (Washington, DC), January 22, 2003

Byline: THE WASHINGTON TIMES

The editorial endorsing the existing steel tariffs completely ignores the devastating consequences the tariffs have had on steel-consuming companies in the United States ("The steel tariffs," Editorial, Monday). Before declaring the steel tariffs a success, a closer look at the downside of tariffs is in order.

The steel tariffs have led to price increases, supply disruptions and massive business and financial losses to steel consumers in the United States. Many downstream industries are faced with the choice of going out of business or moving overseas, resulting in many thousands of American manufacturing workers losing their jobs. The tariff policy creates a situation in which steel producers are protected from competition while their customers must continue to compete in the global marketplace against foreign rivals with access to world-priced steel.

I also must take exception to the editorial's statement that the steel industry "could become dependent on tariff protection." Could become dependent? The U.S. steel industry has been shielded from international competition via tariffs, quotas, duties, voluntary restraint agreements and other trade restrictions by presidential administrations dating to Lyndon B. Johnson's. The latest bid by steel producers to expand tariffs to developing countries is yet more evidence that no amount of trade protection will ever satisfy steel producers.

Instead of considering new tariffs that would further damage steel users, the Bush administration needs to take a closer look at evidence of widespread damage to the economy caused by the tariffs. The only way to end this cycle of protection is to encourage steel producers to compete in the global market - like their customers do every day.

JON E. JENSON

President

Consuming Industries Trade Action Coalition

Independence, Ohio

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I applaud The Washington Times for recognizing the wisdom of President Bush's imposition of temporary steel tariffs. The steel industry is using this temporary reprieve from low-cost, often illegally dumped imports to restructure and consolidate. Many inefficient steel companies have gone out of

business (30 at last count), leaving the survivors with the opportunity to improve their order books at increased transaction prices, thus providing much-needed capital for modernization.

Unfortunately, serious economic problems still will face those survivors when the tariffs expire in 2005. A look at this nation's November trade deficit - a record $40 billion - provides a view of the future for all of American industry, not just steel.

The trade figures show that goods manufactured in the United States are not very competitive versus those manufactured abroad. The American steel-consuming industries knew this and fought the steel tariffs without success. Without the steel tariffs, our nation would have become totally dependent on foreign steel, whose prices would escalate gradually once American competition was sidelined.

American steel-consuming industries only would have postponed the inevitable if they had won against the steel tariffs - and wasn't it the American steel-consuming industries' decision to buy cheap, illegally dumped foreign steel that added to the domestic steel companies' near extinction?

Yet, government subsidies are not the answer to correcting the trade imbalance if we want to preserve our freedom and independence because such subsidies are socialistic. Imposing high permanent tariffs or quotas on imports is protectionism and contrary to our free-market philosophy.

So, what is the answer? Improved productivity has saved the day in the past, but can it overcome the challenges this new global economy poses? With our trading partners unlikely to lower their trade barriers, can we stem the rising trade deficit and restore the health of our economy? Tax cuts will help, but we still face seemingly insurmountable challenges from socialist and communist economies that are the low-cost producers on the global stage. Prosperity at home is threatened unless we can find a way to balance our trade deficit without compromising our principles and way of life.

RICHARD W. RESSLER

North Olmsted, Ohio

THE WASHINGTON TIMES

Full Text: COPYRIGHT 2003 News World Communications, Inc.

Source Citation "Steel tariffs, pro and con." Washington Times [Washington, DC] 22 Jan. 2003: A20. O

pposing Viewpoints in Context. Web. 2 Jan. 2016.

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