Maui cannery decries Bush's tariff on steel

Advertiser Staff and News Services

WASHINGTON — President Bush yesterday slapped punishing tariffs of 8 to 30 percent on several types of imported steel in an effort to aid the ailing U.S. industry, drawing immediate criticism from American allies.

A Corus Group Plc employee inspects a strip of stainless steel at one of the London-based steelmaker's plants. Several nations are challenging the new U.S. tariffs on imported steel, to which the U.S. industry is losing ground. Bloomberg News Service

Maui Pineapple officials have said tariffs on that steel could endanger the cannery's future. Without an exemption, the company is looking at extra costs of $1 million for this year, Maui Pineapple president Doug Schenk said yesterday.

Analysts said yesterday that the tariffs will undoubtedly be passed on to consumers nationwide, but the administration did not estimate by how much. Critics say increased tariffs will raise prices on items such as cars, houses and appliances. One critical study suggested an average family of four would spend up to $283 more a year.

Countries around the world criticized the U.S. tariffs. Japan said it may join the European Union in a complaint to the World Trade Organization. The nations hardest hit by the tariffs include China, Japan, South Korea, the Ukraine and Russia. The EU said it would "set the wheels in motion" to launch a WTO panel, which would rule on the legality of the tariffs and could authorize retaliatory measures.

The tariffs include a 30-percent surcharge on imported tin mill steel, the kind that Maui Pineapple uses. The three-year tariff would drop each year, but subsequent tariff levels have not been disclosed.

Maui Pineapple, which has about 1,000 employees, has been struggling against low-priced foreign competitors, losing millions of dollars per year since the late 1990s.

Yesterday, Schenk said the 30-percent charge could be survivable — but only temporarily. The company took "evasive measures," ordering about a half-year supply of steel ahead of the tariff decision, Schenk said.

"We're hoping that 30 percent is the worst it's going to be, and that next year, it may be down to 20 percent," he said. "That's something we can live with temporarily, if it is that low. It's unfortunate because we're already not profitable, and it does hurt a lot, but it's not going to knock us out of the box if that is the president's decision."

The company is awaiting official word from Bush on whether Maui Pineapple will get an exemption from the tariff, Schenk said.

Schenk said the cannery's only source of cheap tin-coated steel is Japan. Maui Pineapple can order bulk shipments of huge rolls of steel from Japan, but not from America — tighter U.S. shipping safety rules mean only one steel roll can come on each boat.

The higher shipping costs mean U.S. steel would be even more expensive to Maui Pineapple than Japanese steel with the tariffs tacked on, Schenk said.

Bush urged U.S. steel companies to take advantage of the "temporary safeguards" and restructure their industry. The tariffs-and-quota plan, which takes effect March 20, can be amended by Bush if the industry's financial crisis worsens or eases in the next three years.

The action, while short of the 40 percent tariffs sought by companies, was generally applauded by industry and described as compromise approach, one designed to protect the U.S. industry while minimizing backlash from overseas and from U.S. manufacturers that rely on cheap steel.

The plan exempts several U.S. trading partners — including Canada, Mexico and a handful of impoverished nations. It does not embrace an industry-sought $10 billion bailout of pension and health care costs for retired workers from bankrupt companies.

More than 30 steel makers have declared bankruptcy in recent years and the price of basic steel has fallen dramatically. How to protect the industry without hurting the economy with steep price increases is a question that could sway congressional races in November.

"I take this action to give our domestic steel industry an opportunity to adjust to surges in foreign imports, recognizing the harm from 50 years of foreign government intervention in the global steel market," Bush said.