This piece from the Washington post puts an interesting light on the 'new protectionism' US style. The tarriffs help, logically, the steel industry, but the general impact on the economy is negative. In a politically driven economy it all depends on where the votes are I suppose. But please don't let them give me all that cant about believing in free markets, this preaching, it seems, is only for the ears of others.
The steep tariffs that President Bush imposed on imported steel 18 months ago have helped the beleaguered U.S. steel industry regain its footing, but likely have had a modestly negative impact on the overall economy and the woeful U.S. job market, the U.S. International Trade Commission has concluded.
The eagerly anticipated progress report -- completed Friday night, halfway through the tariffs' three-year duration -- will give both steel producers and steel-consuming industries such as automakers and tool companies ammunition for the fierce lobbying battle already underway in Washington over the tariffs' future.
Although the president is not required to make any changes to the tariffs, the World Trade Organization is expected in November to allow the European Union to impose billions of dollars in retaliatory import quotas on U.S. goods. The Bush administration's economic team, which was divided on the tariffs last year, is now united in its call to lift them by then. And some Bush political advisers fear the tariffs may have backfired politically, by costing the president more support in steel-using states such as Michigan and Tennessee than the support he gained in steel-making states such as Pennsylvania and West Virginia.
The reports, totaling three volumes and 890 pages, concluded that the tariffs had cost the U.S. economy about $30.4 million a year, or 0.0003 percent of total output. Steel-using industries did face steeply higher prices at first, but those have declined. Steel-consuming industries have seen their earnings trimmed by $601 million, or 0.01 percent, the reports conclude, while steel producers, mining companies and other beneficiaries saw earnings rise by $67.4 million, or 0.04 percent.
Source: Washington Post