Steel and Tariffs Essay -- Economy Economics Essays

Steel and Tariffs We have all heard this joke. Only now the horse has been replaced with consumers of steel in the US steel industry. Why? Many companies in our economy that use steel as an input to produce their goods are staggering due to recent extraordinarily high steel prices. President Bush dropped a tariff on imported steel on Thursday March 4th; according to basic economics, this cancellation of the steel import tariff should have dropped the price for US domestic consumers. Unfortunately though, that hasn't happened. Steel prices are currently at record highs and many forecast even higher prices to come. This puts huge pressure on small businesses that are dependent on steel for their well being. With higher prices threatening these business owners’ profits and future sales all, including the very large companies, are looking for any break in the high priced storm that seems to be closing in on the future of the steel industry. While many companies are sending out fair warning that con sumers can expect higher prices in the car, furniture, and construction industries, many look for ways to cut costs and layoffs have been mentioned. Could this have been avoided? Many look to the recent lifting of tariffs imposed on steel imports as a possible culprit. Although the lifting of the tariff has affected the market, it is unlikely that the lifting correlates with the recent spike in steel prices. With the United Steel Workers of America screaming that the dropped import tariffs are, "clear evidence of capitulating to European blackmail and a sorry betrayal of American steelworkers and their communities," (Crutsinger 1) and representatives in congress showing much disgust at the presidents lack of respect and compassion for o... ...k, John. "US Steelmakers in Continuing Crisis." Challenge.Vol. 47, no. 1, January/February. M. E. Sharp, INC. 2004. 86-106. Crutsinger, Martin. "Bush drops steel import tariffs, accused of 'betrayal' by industry"The Game Cock. 04/05/04. <http://www.dailygamecock.com/news/2003/12/05/News/BushDrops.Steel.Impot.Tarif.Accused.Of.betrayal.By.Industry-573188.shtml> Goodrich, Ben. Hufbauer, Gary Clyde. "Steel Policy: The Good, the Bad, and the Ugly." Internationas Economics Policy Briefs. January 2003. ---. "Time for a Grand Bargin in Steel?" Institute for International Economics. 04/05/04. <http://www.iie.com/publications/pb/pb02-1.htm>. Hagenbaugh, Barbara. "Steel Prices Soar 66% in a World Market 'gone mad'." USA Today. McLean, VA. Feb 20, 2004. pg B.01 Irwin, Douglas A. Free Trade Under Fire. Princeton, New Jersey: Princeton University Press 2002.