US set to axe steel tariffs

Published on Tuesday 2 December 2003 00:00

A FULL repeal of America’s steel tariffs is imminent, ending a six-month standoff that threatened to escalate into an all-out transatlantic trade war.

Sources in London said last night that the US government is privately advising America’s steel industry to prepare for a complete reversal of the tariffs imposed by the Bush administration in March 2002.

The decision would come 16 months ahead of schedule, and just days before the European Union is due to impose retaliatory tariffs. Brussels has said it will slap US$2.2 billion (1.3 billion) of extra costs on American imports with effect from 6 December. Japan and China have also threatened action.

One source said: "It appears that Washington is trying to set the scene. No-one has heard anything through official channels yet, but the understanding is that an end to the tariffs will be announced this week."

According to reports in the US, Bush commissioned his advisers to explore the political implications of lifting the tariffs early. He faces a backlash from steel producers in the so-called "Rust Belt" of Ohio, Pennsylvania and West Virginia - all marginal seats in the next presidential election.

The advisers concluded the White House had no choice but to back down. EU-imposed duties would deal a heavy blow to the likes of Florida orange growers - an unacceptable political cost. Mid-west manufacturers, another important voting group, are also pressing for an end to the steel tariffs.

A full reversal of the duties was the only practicable way of lifting the tariffs and appeasing the EU, Bush’s strategists concluded. Some pre-2002 barriers will be left intact, however.

David Phelps, president of the American Institute for International Steel, which represents US importers, said: "Bush is going to do the right thing. We’re very pleased."