Bush Team Is Said to Seek Lower Steel Tariffs

Treasury Secretary John W. Snow, Commerce Secretary Don Evans and other economic advisors want President Bush to roll back tariffs he imposed on $3 billion in steel imports, people familiar with the matter said.

Bush’s economic team will argue that the tariffs ended up hurting U.S. manufacturers such as Caterpillar Inc. more than they helped steelmakers such as U.S. Steel Corp., said administration officials and outside advisors who requested anonymity.

“They understand they’ve done more political and economic harm than good,” said Stephen Moore, president of the Washington-based Club for Growth, the second-biggest funding source for Republicans after the party itself. “It’s really damaged the administration’s free-trade credentials.”

It hasn’t been decided whether the team will recommend that Bush eliminate or just trim the tariffs, which are as high as 24% and are scheduled to run through March 2005, an official said.

And when the tariffs were first imposed in 2002, Bush took the advice of his political advisors, such as Karl Rove, over that of his economic team, analysts say.

Bush approaches the November 2004 election with 2.6 million lost manufacturing jobs on his watch. Opponents of the tariffs blame higher steel prices that resulted from the duties for keeping 200,000 people out of work last year.

The president’s decision ultimately will depend on whether he accepts that analysis or one by steel producers that the tariffs have saved more than 10,000 jobs, including ones in key electoral states such as Ohio, West Virginia, Pennsylvania and Michigan, advocates both for and against the tariffs say.

European nations also are threatening to impose sanctions on U.S. exports if a World Trade Organization appeals panel votes as expected in November. An initial WTO ruling already deemed the tariffs violate global trade rules.

Administration officials say Bush is waiting for a midterm report due Sept. 19 from the International Trade Commission, an independent U.S. government agency.

Since the tariffs were imposed, the U.S. has collected $400 million in duties on covered steel imports, according to U.S. Customs data.

The tariffs apply to a quarter of U.S. steel imports.

“The steel tariffs have hurt the overall economy and compromised America’s leadership position in global trade negotiations,” Dan Murphy, vice president for global purchasing at Caterpillar, told a separate International Trade Commission hearing in July.

Murphy said the tariffs made it impossible for some of Caterpillar’s suppliers to get some kinds of steel last year and increased delivery times from weeks to as much as six months.