Article

THE 2002 STEEL TARIFFS: DEJA VU ALL OVER AGAIN

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Abstract

On March 5, 2002, President Bush announced the imposition of tariffs ranging to 30% on steel imported into the United States for a three year period. While being touted as new protection for the industry from unfair foreign competition, since the late 1960s US steel producers have already enjoyed high tariff and low quota barriers to imports. This paper first reviews the three historical phases of steel protection from 1969 to 1992 in terms of tariff and quota levels and the impact on steel consumers. This study tabulates that more than three decades of protection has already cost the American consumer $100 billion in inflated prices for goods containing steel. And not only will the 2002 tariff impose additional losses in consumer surplus above the $100 billion figure, it has already generated protectionist retaliation and repercussions that will be further felt in escalating prices of goods and services unrelated to steel and lost markets for US exports. In that there appears to be no economic rationale for this duty, the paper concludes that politics has superseded economics as the President's justification.

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