Bush 'set to lift steel tariffs'

The Bush administration has decided to repeal most of its 20-month-old tariffs on imported steel to head off a trade war that would have included foreign retaliation against products exported from politically crucial states, according to the Washington Post newspaper.

The Post quoted administration and industry sources as saying that the decision was likely to be announced this week.

A source close to the White House said the decision was “all but set in stone.”

European countries vowed to respond to the tariffs, which were ruled illegal by the World Trade Organisation, by imposing sanctions on up to €2bn in exports from the United States, beginning as soon as December 15.

Japan issued a similar threat. The sources said Bush’s aides concluded they could not run the risk that the European Union would carry out its threat to impose sanctions on orange juice and other citrus products from Florida, motorcycles, farm machinery, textiles, shoes, and other products.

Bush advisers said they were aware the reversal could produce a backlash against him in several steel-producing states including Pennsylvania, West Virginia and Ohio.

Bush decided in March 2002 to impose tariffs of eight to 30 percent on most steel imports from Europe, Asia and South America for three years.

The WTO’s ruling against the tariffs was finalised three weeks ago, clearing the way for the retaliatory levies, and Bush’s economic team concluded unanimously that the tariffs should be scrapped.

The source involved in the negotiations said the consensus in the White House was that “keeping the tariffs in place would cause more economic disruption and pain for the broader economy than repealing them would for the steel industry”.

A White House spokesman would not comment beyond saying that it is “still a matter under review by the president, and we’ll make announcements when we have announcements to make”.

President Bush was travelling to Pittsburgh and Michigan today for a fund-raiser for his re-election campaign.

“It’s a very big decision for the president from the political standpoint,” said William Green, a Pittsburgh-based Republican political consultant. “I understand the WTO pressure. But it’s at least 60 electoral votes involved. That has to weigh heavily on this president.”

Bush will host a fund-raiser in Dearborn, Michigan, a suburb of Detroit, where car parts manufacturers say the tariffs have hiked steel prices. Bush is also expected to talk about the economy at steel-consuming Dynamic Metal Treating in Canton, Michigan.