On March 5th, 2002, President George W. Bush issued a tariff on all imported steel in response to what policy makers called a detrimental surge in steel imports. In other words, they sought to protect U.S. steel companies by placing an 8-30% tariff on imported steel products from everywhere except certain countries such as Canada and Mexico due to the violations that the tariff would have on the North American Free Trade Agreement. Also certain developing countries such as Argentina, Thailand, and Turkey were exempt from the tariff as well. The biggest indicating factor that supported there indeed was a surge in steel imports was that over 30 steel producers had filed bankruptcy in America during the recent years.
The normal ad valorem tariff on steel at this time was around .4% – 1% just to put into perspective how large of an impact this tariff had. However, even as high as this tariff was, steel producers were originally looking for a tariff size around 35-40%. The tariff was to stay in effect until 2005 but the tariff was lifted by the Bush Administration on December 4th, 2003.
I feel as though the Bush Administration had no choice but to take some sort of action based on the facts that were given. However, whether Bush was being completely honest with the fact that there was a import surge of steel is beyond me. The real effects of the tariff were that it allowed home companies be more competitive and grow while the international market was not a factor. However the problem with this was that the supply of steel was limited without the extra steel being imported from other countries. Plus the fact that the American steel industry is mainly made up of smaller companies that employ less then 500 workers (according to Small Business Administration) means that the market is much less efficient due to the high fixed costs in the steel industry. Also due to the increase in the price of steel, small companies couldn’t afford to... [continues]
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