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Success of Steel Tariffs
Should Shame Free Traders

Our Buy American Mention of the Week!
by Roger Simmermaker
November 16, 2002

President Bush may declare himself a free trade president, but his steel tariffs are a fine example of the successful work of a protectionist. The numbers are in, and they aren't pretty for backers of trade liberalization beholden to economic textbook theory.

If only free traders had the backbone to realize and accept the positive results of the steel tariffs rather than dodging them while undeservedly declaring free trade as a propeller of U.S. prosperity, they would from this day forward stop advocating their disastrous invisible hand policies.

According to free traders, protective tariffs reduce imports and are supposed to promote a potentially disastrous isolationism. But according to the Wall Street Journal, certainly no beacon of protectionism or America First, imports of steel subject to the Bush tariffs are on the rise. Hot-rolled steel imports are up 40% from a year ago. Imports of coated sheet steel increased 30%. Plate steel imports rose a more modest 10%.

A brief reading of U.S. trade policy would have clued in free traders that import tariffs don't always reduce imports. Even during the Great Depression, imports for dutiable goods rose almost equally with non-dutiable goods after the Smoot-Hawley Tariff was signed into law by Herbert Hoover.

Another false claim of free traders is that tariffs are bad for consumers, and that consumers always end up paying the tariff. More reading of U.S. trade history tells us that Abraham Lincoln said it was usually the foreign producer - not the consumer - who usually ends up paying the tariff. Honest Abe also found no negative relationship between higher tariffs and economic growth.

Even as U.S. Steel expects its first year of profits since 1999, it is raising prices for steel used in automobiles a mere 5-10 percent. Since automakers use only between $700 and $1,000 of steel in their cars, consumers stand to get hit with a price increase topping no more than $100. In the days of 0% financing, this increase is negligible at best with car prices so affordable. But even without the substantial incentives automakers are offering today, if you can't negotiate $100 off the price of a new car, you had better bring someone with you who can or stay away from the car lot.

Could domestic automakers skirt the tariffs and import their steel from abroad? No. Most foreign steelmakers can't produce and export steel needed for automobiles cheaply enough to be competitive with domestically produced steel. And even if they could, many can't fit the necessary quality requirements in quantities automakers demand. So the chance of your newly-built domestic car being assembled with illegally dumped steel is next to nothing.

All this information is enough to make any true American patriot proud. It can only add to the joy of buying a new car, if you're in the market for one, knowing that if it's made in the USA, it's assembled with all American steel. Chalk up another victory for the protectionists, courtesy of a self-proclaimed free trade president.


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