In December 2003 President Bush announced his decision to removethe steel tariffs he had imposed 21 months earlier under Section201 of the Trade Act of 1974. Since then prices for most majorsteel products have achieved or are flirting with record highs, andone steel company after another has reported strong earnings forthe first quarter of 2004. Profit estimates going forward are justas rosy.
Meanwhile, many domestic steel-consuming industries are introuble. As their steel costs have risen dramatically, many havehad to endure shrinking and even negative profit margins.
Despite the removal of the Section 201 steel tariffs, importedsteel remains subject to hundreds of antidumping and countervailingduty orders. Those duties artificially reduce supply, puttingsteel-consuming industries at the mercy of domestic producers whoare virtually unrestrained from setting high prices.
Policymakers should move to mitigate the adverse consequences ofrestrictions on trade and endeavor to restore greater competitionto this vital market before skyrocketing steel prices damage theU.S. economy.
Accordingly, the president, through the secretary of commerce,should exercise his authority to undertake "changed circumstances"reviews of all outstanding antidumping and countervailing dutyorders on steel products with an eye to terminating those measurethat no longer make sense. Many have been in place for more than adecade, a period during which circumstances have obviouslychanged.
Lifting, even temporarily, some of the 188 antidumping andcountervailing duty orders now in effect would alleviate some ofthe burden and be a shot in the arm for U.S. manufacturing. Itwould also be the next logical step toward restoring realcompetition in the vital steel market.