A Reaction To The Steel Decision

President Bush recently announced his decision in the Section 201 steel investigation, calling for tariffs ranging from 8 to 30 percent on imported steel. Of the products on which the International Trade Commission (ITC) voted affirmatively on injury or were evenly divided, the president chose to impose restrictions on all but tool steel and stainless fittings and flanges.

Columns From: 5/19/2002 Modern Machine Shop,

President Bush recently announced his decision in the Section 201 steel investigation, calling for tariffs ranging from 8 to 30 percent on imported steel. Of the products on which the International Trade Commission (ITC) voted affirmatively on injury or were evenly divided, the president chose to impose restrictions on all but tool steel and stainless fittings and flanges.

Several people from the Precision Metalforming Association have responded to this decision. "I am extraordinarily disappointed that the president has decided to make a political decision on steel tariffs rather than a decision based on what is good for the American economy," says Mark Erickson, chairman of PMA. "The U.S. steel industry will once again benefit from government protection at the expense of steel consumers. I am particularly concerned that steel suppliers will use this as an opportunity to ignore their existing 6- and 12-month contracts and raise prices immediately as soon as tariffs begin to take effect."

Over the past few months, PMA, individual member companies and other organizations representing steel-using industries have presented convincing data about the impact tariffs will have on jobs in the metalforming and other steel-using industries. "The truth is, more manufacturing jobs will be lost from these steel restrictions than will be saved in the steel producing industry," says William E. Gaskin, PMA president. "The president has let us down by imposing this new tax on American manufacturers and small businesses. "Our members are steel consumers and this move puts them at a disadvantage in the global marketplace for fairly priced steel, thereby placing the entire industry at risk."

According to a study conducted by Trade Partnership Worldwide, LLC, the massive job losses incurred in steel consuming industries will cost American consumers upwards of $440,000 per year for every steel job the president has protected. The president's decision may result in some American companies losing business to overseas competitors. "We are unable to pass the high cost of steel onto our customers in the automotive, appliance and technology industries," says Mr. Erickson, also president of Thomas Engineering Co. (Minneapolis, Minnesota). "Our customers will take their business outside the United States. We see it happening every day, and it is only going to get worse now that the President has imposed these tariffs."

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