Will Bush Pay the Price For Abandoning His Principles?

[Fear_Itself]

Steel Tariffs Appear to Have Backfired on Bush

**In a decision largely driven by his political advisers, President Bush set aside his free-trade principles last year and imposed heavy tariffs on imported steel to help out struggling mills in Pennsylvania and West Virginia, two states crucial for his reelection.

Eighteen months later, key administration officials have concluded that Bush’s order has turned into a debacle. Some economists say the tariffs may have cost more jobs than they saved, by driving up costs for automakers and other steel users. Politically, the strategy failed to produce union endorsements and appears to have hurt Bush with workers in Michigan and Tennessee – also states at the heart of his 2004 strategy**

Or will conservatives give him a pass? How important is free trade to this president? Should Karl Rove be asked to resign for championing tariffs?

[Rashak_Mani]

When Bush imposed that tariff on steel I knew it would backfire… not politically thou… economically. The steel industries in the US arent competitive enough and protecting them is delaying the inevitable.

The biggest problem is that protecting such a basic industry like steel put the prices of all sorts of american products up... from autos to planes. It didnt take much to figure that overall it would hurt the US economy more including punitive tariffs in US products as retaliation. Whenever some leftie dope head in Brazil talks about protecting stuff I love to use the Bush steel tariffs as an example of how free trade isnt just a political decision anymore.

 Answering your questions... Free trade is rarely a bonus in the political arena in any country. Voters react more to "protection" of national industries than they do to prosperity being helped out by "free trade" benefits. Benefits that arent very clear to the general populace and many times bring unemployment in certain areas. Bush will do only lip service to free trade...

[TVAA]

What principles?

[mhendo]

Well, as TVAA suggested, your OP assumes that “free trade” really was a principle of the administration.

As far as i can tell, Bush is like many other US politicians in this regard (Democrat and Republican). He’ll trumpet free trade as a nebulous ideal in order to get other countries to open themselves up to American companies, but is also perfectly willing to impose tarrifs and other trade barriers when it suits a powerful lobby group within the United States.

The most consistent thing about US “free trade” policy is its inconsistency and hypocrisy.

[Sterra]

Well, the whole steel tarriff thing hurt him in the states it was supposed to help. I think a better place to look at this would be Nevada. Bush promised to stop the whole Yucca mountain thing.

[sailor]

Protectionism is almost always a bad idea, be it for farming, for steel or for anything else. There are those who say farming is different because we have to eat but steel is no less necessary. If the USA had no access to steel it would collapse in a matter of days. But, if you have money from producing other things, then you can buy farm products just like you can buy steel.

The problem with these things is purely political. The benefit of protectionism is very visible to those who get it while the cost is very spread out and not so visible. The cost of not protecting goes very directly to a few and is very visible while the rest of the country who benefits does not feel it so directly. If you lose your job to a korean steel mill then you know protectionism would have helped you. But how can you know you paid more for your car due to that protectionism? You’d have to be an expert in cost accounting working at Ford. Protectionism is always a safe bet politically and bad in real terms.

[Mtgman]

After the collapse of the trade talks in Cancun I’m not suprised at much of anything this administration does regarding international trade. A major factor in the collapse was the developed nations keeping trade barriers up and subsidizing their agricultural interests to keep them artificially competitive with agriculture products from developing nations. This propping-up of the agriculture interests has reduced the trading power of the developing countries who, by the rules of free trade, should be able to penetrate American markets because they can produce lower priced goods. Subsidies to American agricultural interests defrays the higher cost of the production of American agricultural products and allows them to compete on price without reducing their costs.

This flies in the face of the principles of free trade, and it props up an industry which, according to the rules of capitalism, should have been winnowed out and replaced with imports. The US is supposedly now seeking bilateral or selectively multi-lateral trade agreements with certain partners instead of truly working towards engaging in worldwide free trade.

Enjoy,
Steven

[Rashak_Mani]

The problem of the US seeking bilateral and limited multi-lateral is that it can coerce its will more strongly since its the US vs some other smaller group or individual country. This doesnt generate good negotiations…

Careful thou when saying that protecting your industry is WRONG… ideally everyone should drop them… but if your the only one lowering your defenses your losing. The WTO talks are in order to get everyone to lower their tariffs and protections somewhat in a balanced way.