Trade war blowback

Bush's efforts to secure his electoral standing in PA and WV by imposing tariffs on imported steel have hit a roadblock. Immediately after Mr. Free Trade announced his hypocritical tariffs, the European Union and Japan struck back swiftly. The EU espcially showed sharp political acumen by threatening retaliatory tariffs on goods from politically sensitive states, such as Florida orange juice. At the same time, the administration has faced fierce criticism from domestic steel users (such as car manufacturers) who warn of layoffs and higher prices for their products.

Thus, the Bush administration is backpedalling furiously, stalling the EU sanctions by granting 61 exemptions to the tariffs back in early June, and another 46 yesterday. The EU has taken a 'wait and see' attitude on the exemptions before deciding whether to impose their retaliatory tariffs.

It'll be interesting to note public reaction to the exemptions in PA and WV, which were the intended beneficiaries (alongside Bush) of the protective tariffs. By all accounts, it looks as though Bush will have to gut the tariffs, rendering them completely impotent. That could play as a Bush betrayal of PA's and WV's struggling steel industries. Not good electoral policy.

But if he does nothing, he must then contend with punitive tariffs against key states, as well as resist a concerted counterattack by steel consuming industries in key midwestern states such as Illinois, Michigan and Ohio.

Isn't it delicious when transparantly political decisions backfire disastrously?

Posted June 18, 2002 08:37 AM | Comments (0)