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US Steel Industry Has Mixed Reaction to Bush Tariffs - 2002-03-09

President Bush's decision to impose punitive tariffs on some imported steel is getting mixed reviews from those in the American steel industry. Steelworkers had hoped the tariffs would be higher, and some are not convinced the administration's move will be enough to save their jobs.

At the United Steelworkers Union Local 1011 hall in East Chicago, Indiana, John Emerson was answering phones Wednesday. He worked at nearby LTV Steel for 34 years until it recently closed, a victim, he says, of low-cost imported steel. He is among those who wanted the Bush administration to impose tariffs of 40 percent on imports. They got a maximum of 30 percent, instead.

"What President Bush gave us was okay, but it is not enough. Not enough for the steel workers hoping for the level playing field that we should have to really compete with other [foreign] companies. If that is how it had been at first, maybe LTV would not have gone down," Mr. Emerson says.

Since 1997, LTV and about 30 other American steel companies have filed for bankruptcy protection, and laid off more than 40,000 workers. Steel prices in the United States are at a 20 year low, partly because of an economic downturn and partly because there is so much steel available. Economics professor Mark Witte at Northwestern University near Chicago said some of that surplus steel is imported.

"Imports run to, I think, 25 percent of U.S. steel usage, but there are aggregation issues within that. I think that steelmakers who do specialty steel are doing fine. It is mostly the bulk rolled steel, the less-differentiated products, that are feeling more competition," he says.

The tariffs go into effect later this month and will last for three years. Economist Gary Lynch at Indiana University Northwest said that should give American steel makers a chance to recover from their economic problems, although not everyone agrees it is the best way to help the industry.

"One consequence of not helping the steel industry is that it would fail, but there are others who say if we did not help them, they would have more of an incentive to modernize," Mr. Lynch says.

United Steelworkers Union Local 1011 President Dennis Henry says the industry has modernized. He says foreign subsidies and fewer regulations make imported steel cheaper than American-made.

"We are very efficient. If they were not being subsidized by their governments, if they had to meet the same environmental requirements that we did, they would not be able to compete with us," Mr. Henry says.

Manufacturers that use steel to make goods say the tariffs on imports will drive up their costs, and could mean they will have to cut workers and raise prices for consumers.

In tiny Burns Harbor, Indiana, town councilwoman Myrtle Zehner is happy with the new tariffs. She hopes it will benefit Bethlehem Steel, which is both her employer and a company which provides 87 percent of the town's tax revenue.

"If anything, this has been a real hard wakeup call that we have to get away from steel as a town, being so dependent on it. Even though we are dealing with our immediate money problems, we are going to have to start looking to attract non-steel business," Ms. Zehner says.

Bethlehem Steel is among the companies that have filed for bankruptcy protection. This year, Burns Harbor says it might have to raise property taxes for its 800 residents by 50 percent, and make deep cuts in the municipal budget.