Posted on: Thursday, December 4, 2003

U.S. expected to lift majority of steel tariffs

By Rob Kaiser
Chicago Tribune

CHICAGO — President Bush is expected today to end most of the tariffs that his administration slapped on steel imports, and to announce a plan for softening the blow to U.S. producers.

Union rallies and last-ditch industry efforts to keep the tariffs have illustrated how politically difficult that message will be to deliver. But perhaps the best argument Bush can offer is that the tariffs' main goal appears to have been accomplished: protection for a reorganization and revitalization of the U.S. steel industry.

Since the tariffs were introduced in March 2002, steel prices have recovered, the industry has been consolidating, and steel bankruptcies have almost ceased.

Once wrestling with costly pension plans and restrictive labor contracts, many steelmakers have restructured, have been bought by competitors or have been absorbed into new firms such as International Steel that can better compete globally.

Still, Bush faces a wave of resistance against ending the tariffs. It's almost as strong as the one he confronted in creating the protections.

Nationwide, steelworkers have rallied to keep the tariffs, arguing that the industry needs more time to reform and that the president should stick to his pledge of keeping the tariffs for three years.

At the United Steelworkers Local 1011 in East Chicago, decorated with campaign posters for Democratic candidate Dick Gephardt, many steelworkers credit the Republican president for bringing back their jobs. Yet, they promise any goodwill toward Bush will disappear if he yanks the tariffs.

"If he ends them, it didn't do him any good for re-election," said 61-year-old Glen Morton, a 41-year veteran of the local steel mills.

Wilbur Ross, who founded International Steel Group Inc. in April 2002, said he never would have started the company had Bush not taken action. The tariffs allowed International Steel to win domestic customers, forge more flexible labor agreements with unions and raise $1.4 billion in capital, Ross said.

The upstart company has become the second-largest integrated steelmaker by cobbling together mills in Indiana, Ohio and other states from the remnants of shutdown firms LTV Corp. and Acme Metals, as well as bankrupt Bethlehem Steel.

International Steel is poised to go public and expects to raise more than $400 million in what would be the first initial public offering from a U.S. steel company in more than a decade.

Although Ross expects Bush will end the tariffs, he believes that the president will include protections against foreign companies illegally dumping low-cost steel on the U.S. market.

"He intends to enforce our trade agreements," Ross said. "The days of the Europeans and others rolling over us and ignoring trade agreements are gone."