The Politics of Trade in Steel

Case Write Up:

The Politics of Trade in Steel

1. I believe the Bush Administrative had a good solid reason for imposing tariffs in March 2002 on steel imports. As of a result of that decision, Bush was able to maintain 160,000 jobs in America. Imposing the tariffs was not the problem in this case study. I believe that the actual problem was the percentage that was charged. Instead of being charged with a 30 percent tariff, the European Union should have had a less percentage. This way the Bush Administration could have still attempted to rescue the steel industry, and peacefully continue to trade with the European Union.

2. When Tariffs are imposed, it can be beneficial to some parties, and costly to others. Tariffs are mainly used to protect domestic producers and employees from foreign competitors. A tariff raises the cost of imported products, therefore creating an advantage for the domestic producer with cheaper prices over the foreign producer. Tariffs benefit the government, due to the fact that it increases government revenues and it benefits the domestic producer. On the other hand, the consumer loses. Consumers pay more for certain imports, not to mention when prices increase for the product, consumers must increase the cost of production. As a result, this makes it difficult for consumers to compete in the global marketplace. The World Economy also takes a loss with tariffs because they reduce the overall efficiency. With protection tariffs in place, domestic producers are able to develop products that could have been produced more efficiently with a foreign producer.

3. I don't think the Work Trade Organization represents a loss of U.S. national sovereignty. I think the World Trade Organization might have sided with the European Union because they felt that the U.S. had gone too far with the tariffs. They probably thought that if they did allow the EU to impose counter tariffs on the U.S. that could ultimately damage trade between the two countries and start a trade war, the U.S. might come to their senses. I believe that this was an attempt on the World Trade Organization's part to bring a truce between the two countries.

4. If tariffs were removed on international trade in steel and subsidies to steel exporters were banned, foreign producers would benefit the most. This way, producers abroad would be able