2002 United States Steel Tariff
President George W. Bush introduced `The Section 201` steel tariff on imported steel on March 5, 2003. The tariff of 8- 30 %, was supposed to be temporary, lasting till 2005. However it was withdrawn early on December 4, 2003 due to intense criticism, pressure and retaliatory tariffs introduced by other countries, especially EU, on products from US.
The tariffs were originally introduced to provide protection to the US steel makers from the detrimental surge in the availability of low cost imported steel. The case was further strengthened as more than 30 US steelmakers had filed for bankruptcy in the years leading to the introduction of the tariffs. The tariffs sought by some steel makers was as high as 40%.However, due to the free trade agreement signed by the US with Canada and Mexico, these countries were exempted from such tariffs as the penalties was too high for US to afford. Some developing countries such as Argentina, Thailand and Turkey were also exempted from the tariffs.
Critics came down heavily on the Bush administration as they claimed that such policy would harm US business and consumers more than saving the indigenous steel industry. They saw it as a step away from Bush’s commitment to free trade.
Case was filed at the Dispute Settlement Body of the World Trade Organization to decide the fairness of steel tariffs. WTO verdict came out against the steel tariffs but the Bush administration declared that it would preserve the tariffs. EU reacted strongly to this. It annouced that it would impose retaliatory tariffs on the US. EU tariffs would be on different products to like wise hurt the US . Finally the potential of the threat of a `trade war` so huge that US had to back down and ended up withdrewing it tariffs early in 2003.
A second wave of political criticism came from the US steel producer and protectionism soon after the early withdrawal of the tariffs. It was,though, widely accepted and cheered by the supporters of free trade.
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