Clinton Slaps Tariffs on Steel Imports
Filed at 8:42 p.m. ET
By Reuters WASHINGTON (Reuters) - Under pressure from U.S. steel makers and labor unions, President Clinton on Friday imposed punitive tariffs on steel imports in a move that could increase trade tensions between the United States and major steel-producing nations including Brazil, Japan, South Korea and the European Union.
The White House said tariffs on imported line pipe would increase by up to 19 percent. Steel wire rod, which is used to make hangers, cables and fasteners, would face additional duties of up to 10 percent. The tariffs are designed to help cash-strapped U.S. steel makers and thousands of workers hard-hit by low-cost imports, chiefly from Asia.
The White House estimated that wire rod and pipe shipments valued at $410 million could be affected by the decision, a fraction of total U.S. steel imports of $13.8 billion. The tariffs would remain in place for three years.
The decision, held up for months by a divided U.S. administration, could prompt retaliation from the world's major steel producers.
``It was a difficult decision,'' a senior Clinton administration official conceded.
Japan's trade minister warned last year that an increase in steel wire rod tariffs could spark a protectionist backlash from Tokyo, undermining U.S.-Japan market-opening efforts.
The European Union had also urged Clinton to show restraint.
U.S. trade officials defended the duties, saying they were consistent with World Trade Organization (WTO) rules. They said wire and pipe imports had surged in recent years, while prices plummeted, crippling U.S. producers and costing thousands of American steel jobs.
U.S. steel makers welcomed the decision, though they had pressed for even higher tariffs.
``The relief announced today should help an industry that has been devastated by an onslaught of wire rod imports that swelled to record levels in 1999,'' said Charles Verrill, attorney for steel makers in the wire rod case, the United Steelworkers of America and the Independent Steelworkers Alliance.
The unions, traditionally allied with Clinton's Democratic party, had pressured Clinton and Vice President Al Gore to rein in steel imports, particularly from Japan. Gore, who is seeking the Democratic presidential nomination, is counting on labor's support at the polls in the November election.
By some estimates, the U.S. steel industry suffered losses of $230 million because of cheap imports between 1996 and 1998. Imports increased by over 40 percent during the period, Verrill said. U.S. wire rod producers employ 4,000 workers; line pipe makers employ roughly 1,000 workers.
Under Clinton's decision, the United States will impose an additional 10 percent tariff surcharge on imports of steel wire rod above 1.58 million net tons in the first year.
The surcharge on wire rod would drop to 7.5 percent in the second year and 5 percent in the third. Major producers include Trinidad and Tobago, Brazil, Moldova, Ukraine and Germany.
Imports of line pipe above 9,000 net tons would be subject to an additional 19 percent tariff in the first year. In the second year this would drop to 15 percent and in the third year to 11 percent. South Korea, Japan and certain EU nations would be affected. South Korea is by far the largest supplier.
Mexico and Canada, U.S. partners in the North American Free Trade Agreement, would be exempted, the White House said.
U.S. trade laws allow domestic industries to seek curbs on imports found to be causing them serious economic harm.
In August 1999, Clinton brushed aside objections from European trade leaders and approved a $1.5 billion emergency loan program to aid U.S. steel, oil and gas companies hurt by cheap imports and low commodity prices.