Bush expected to end steel tariffs

President George Bush may be following the course of least political resistance by lifting steel tariffs he imposed in March 2002.

The duties on imported steel enabled Bush, with an eye toward re-election in 2004, to extend a helping hand to a beleaguered major US industry. Since then, however, the tariffs have turned into a huge policy headache for him both at home and abroad.

By ending the tariffs, as is widely expected, Bush risks angering steel makers and their workers in vital electoral states including Ohio, Pennsylvania, Indiana and West Virginia.

But analysts suggest leaving them in place could risk even more by sparking a global trade war and unleashing punitive duties against a range of American goods from yet another set of battleground states.

Such a trade war could threaten the fledgling US economic recovery and reverse the recent stock market rally.

The controversy is casting a shadow over Bush’s fund-raising visit today in Pittsburgh, where one of his hosts will be Thomas Usher, chairman and chief executive of US Steel.

Administration officials said yesterday that Bush had not made a decision on the tariffs, but principal aides have recommended that they be removed.

Among the American products targeted by the European Union, Japan and others if the steel tariffs should stay are orange juice from Florida, nuts from California, clothing from North and South Carolina, rice from Arkansas and apples from the Pacific Northwest.

The tariffs are also hurting steel-using manufacturers and their consumers - important in car-making Michigan, another expected 2004 battleground, where Bush visited yesterday.

“The political benefits, to the extent that they existed, are water under the bridge. And the political costs have been mounting,” said Brink Lindsey, a trade expert at Cato Institute, a Washington think tank. “The President is really between a rock and a hard place.”

Internationally, the tariffs have caused friction with Britain, Italy, Spain and Japan and have tarnished Bush’s credentials as a free trader.

The dispute was an irritant during Bush’s trip last month to Britain, where Tony Blair raised the subject “not once, not twice, but three times,” according to Bush’s count. Blair is under mounting criticism for failing to get more in return from the United States for his help with Iraq.

The president and his top aides overestimated the political advantages of the tariffs and underestimated the downside, even some Republican advisers suggest privately.

The World Trade Organisation ruled last month that the tariffs are illegal. Bush has until December 10 to act or risk retaliatory tariffs beginning on December 15.