Has America started a war on trade?

[MrPresident]

The recent decision by President Bush to introduce tariffs on steel imports may be good news to American steel workers but will it started a trade war. Europe has already started a complaint to the WTO but in the mean time it will probably also raise tariffs. Is this a slap in the face of the developing countries who agreed to free trade? America has claimed that this tariff is to prevent dumping by countries producing below market cost. However the WTO only allows such tariffs if imports have been substanial rising over the past years. In America steel imports have actually dropped by 20 (or so)%. Has Bush really taken into account the effect on world trade and on businesses inside of America? For example the price of domestic cars will surely rise, does the ordinary America support such a measure? Is it just an example of the pork-barrel politics of Washington protecting its inefficent steel industries threatened by more modern, cheaper producing foreign counterparts? Can America do anymore to offend its allies especially with the upcoming confrontation with Iraq, I wonder whether it can still rely of British support. Has America really become an arrogrant superpower out to exploit its position and if so can it get away with it?

 

[knowltok2]

As I posted in another thread, there is nothing more convoluted than trade negotiations between nations. These individual tarriffs are ussually nothing more than a retaliation to a retaliation, to a retaliation, to a...well you get the picture. These things are then traded away in boring trade negotiations that no one pays any attention to.

Generally reports of this kind are made on slow news days and inflated to be more than they are worth. I don't know the particulars, but I can assure you that there are tarriffs on both sides of the ocean (pick one) and each individual one is nothing more than an elaborate dance.

I won't claim that these tarriffs are necessary, but in a world where every nation is imposing them here and there, even a nation that is striving for "free trade" is going to have some of their own.

My analogy is the person who is actively working for a safe world with no fear and no crime. Great goals, but they still lock their doors, because they aren't there yet. It isn't exact, but you may get my point.

 

[polymath]

Imposing tarriffs implies favouritism. I guess there's nothing wrong with that if you are on the beneficial end, but everyone else won't like it.
Anyway, we are having our own problems in the UK with steel. Some foreign charlie (Mr Mittal, who owns the largest employing company in Romania, and produces millions of tonnes of steel a year, gave dear Tony Blair and his Labour chums a few grand, and lo and behold, dear Tony shafts our national steelmakers by recommending Mittal to all and sundry.
At least your Bush Junior sticks up for his own. Whether I think he's a goon or not, and I do, he looks after US business alright.

 

[Mr Spice]

Originally posted by MrPresident
Has Bush really taken into account the effect on world trade and on businesses inside of America? For example the price of domestic cars will surely rise, does the ordinary America support such a measure?

Bush´s advisors have most surely pointed out these effects on domestic industry.

I believe he´s playing a cynical power game. By increasing tarriffs he will look like a hero and mobilize support for his party in the upcoming elections. The long term effects for USA will be increased prices and unemployment, but Bush is probably counting on the population being too stupid to see the connections. It will take some time for the bad effects to show and when they do Bush can always blame something else.

 

[MrPresident]

he looks after US business alright.

It has been proven that tariffs (and other barriers to trade) actually badly effect everyone involved (with the exception of domestic producers who don't export). Trade drops meaning a reduction in choice, consumers suffer, a reduction in competition meaning higher prices, consumers suffer and a multiplier effect on related industries causing further price rises, consumer suffer. The people who do benefit are inefficent domestic producers and of course the US government (tariff revenue). So Bush sticks up for inefficient domestic steel producers and thats it. He doesn't look after his own, in fact the majority of Americans will be badly hit. Also there is issue of retaliation tariffs which Europe will surely use which will further effect US consumers and other businesses.

I think an important issue is the fact that at the very time Bush wants foreign allies the most, he is constantly pissing them off. Europe is increasingly worried about further escalation in the war on terror and putting up trade barriers will hardly improve this situation. As for Britain, the only country willing to stand side by side with the Americans, will our steel industry has been repeatly hit over the years and this is just what it doesn't need. So maybe we will reconsider our position in this increasingly one-sided alliance.

 

[knowltok2]

Originally posted by Mr Spice

I believe he´s playing a cynical power game. By increasing tarriffs he will look like a hero and mobilize support for his party in the upcoming elections. The long term effects for USA will be increased prices and unemployment, but Bush is probably counting on the population being too stupid to see the connections. It will take some time for the bad effects to show and when they do Bush can always blame something else.

And I suppose the EU was playing a cynical power bame with the Banana Regime? Come on, you guys are siezing on one story and trumpetting it as proof of GW and the US's evil intent, and duplicity. This kind of thing goes on all the time and is part of a much larger game that nations play.

I just did a quick search and came up with the Banana Regime as an example of where the WTO ruled against one of Europe's unfair trade practices. The EU didn't immediately take the steps recomended by the WTO to remove the unfair provisions, and part of the US's retaliation was a tarriff on a variety of products such as bath oils (hurt Britain aparently) and other items.

There are dozens of other examples of nations all over the world imposeing tarriffs and counter tarriffs on all manner of goods and services. It is a mixed up mess and you can't logically pull one item out and use it as independant proof of sinister intent. All of these trade issues have to be taken in context, not as a 90 second news byte, or a two page article.

The world is working for free trade, but it is not going to be an uneventful journey. All sides are going to interact in the give and take, and if you think that only the US is imposing tarriffs on trade, you are being willfully ignorant.

 

[Greadius]

Okay, a few facts about the stupid decision.

1. Import competition has dropped 27% since 1998, so its not getting worse; however, the steel industry is going bankrupt.
2. Many of the steel industries that are major competition problems are government subsidized so they already have a major advantage over domestic producers.
3. The tariff does not apply to Canada, Mexico, or other developing nations

I think the last point is key because, if anything, it would help THOSE nations become competitive.
However, I'm against tariffs in general, and I don't think this one was an absolute necessity. Temporary displacement of workers has always been one of the negative side effects of free markets, its unfortunate Bush ignored this.

And for some reason, this decision is getting a lot of press, and makes the U.S. look protectionist and hypocritical.

 

[MrPresident]

The tariff does not apply to Canada, Mexico, or other developing nations

It is aimed at the Pacrific Rim, I don't know about you but most of those countries can be considered developing. The reason it is getting a lot of press is because America is a key member of the WTO and at the last few conferences have fiercely pushed for more countries (especially developing) to lower trade barriers. Also as I have said this is a time when the US should be making concessions towards its allies and the world in general. Mr Bush is wrong and probably acting illegally. America wonders why the world considers it arrogrant, well actions like this are why. Bush needs to remember that America is but one country in the world. If he continues to look inwards then don't be surprised that when he looks outwards again no-one is there.

 

[Jimcat]

One factor that many people forget to consider is the strategic need for a country to have certain industries within its borders. In a perfect world, there would be no chance of war (of the trade or the shooting variety) and everyone could just export whatever they make best, and import other items from the cheapest supplier.

In reality, though, if a nation's steel production (just to use this as an example, although it applies to other industries as well) drops due to foreign competition, and then its supply of foreign steel gets cut off, that nation will find itself in big trouble. They will have to rapidly build or retool their industrial plant, or do without the steel they had been used to. Either way the economy takes a big hit and the nation is weakened.

In these less-than-peaceful times, it makes some measure of sense for countries to protect their domestic industries, especially key world powers like the US. I'm not saying that I completely support Bush's policy, but there is some logic behind it other than "secure the union vote and stick it to the foreigners".

 

[Greadius]

Originally posted by MrPresident
It is aimed at the Pacrific Rim, I don't know about you but most of those countries can be considered developing. The reason it is getting a lot of press is because America is a key member of the WTO and at the last few conferences have fiercely pushed for more countries (especially developing) to lower trade barriers.

"The key steel producers affected include Japan, South Korea, China, Taiwan, Russia, Ukraine, Germany and Brazil, plus smaller makers like Sweden and Australia."
From a CNN story... I wouldn't call most of those 'developing' nations. For me the biggest issue is the subsidy one that created an uneven playing field for U.S. corperations. Still think the tariff is a bad idea, but the tariff is in direct response to uncompetitive actions on the part of steel producers.

Originally posted by MrPresident
Also as I have said this is a time when the US should be making concessions towards its allies and the world in general.

That statement is funny for some reason. Was there ever a time when you think the U.S. shouldn't have made concessions?

Originally posted by MrPresident
Mr Bush is wrong and probably acting illegally. America wonders why the world considers it arrogrant, well actions like this are why. Bush needs to remember that America is but one country in the world. If he continues to look inwards then don't be surprised that when he looks outwards again no-one is there.

That statement sounds so British. He is no acting illegal by any U.S. laws, so no, I definately don't think that is the case. But once again, this is not 'our' arrogance, this is Bush making a political decision aimed at those people with signs outside the White House. I haven't heard a word of support for this move outside steelworkers. Yes, we're arrogant, this is a bad example though.

 

[knowltok2]

Originally posted by MrPresident
America wonders why the world considers it arrogrant, well actions like this are why. Bush needs to remember that America is but one country in the world. If he continues to look inwards then don't be surprised that when he looks outwards again no-one is there.

Please . Every nation does this. They all impose a tarriff on this, or protect that. I consider it arrogant to blast out criticisms from an ivory tower when the EU is just as guilty of this type of thing.

As far as America looking inward and then not finding support later, give me a break. I suppose that given that the US has a boundry dispute with Canada, we shouldn't expect any help from them, and I guess the reciprocal should be true. Are you truely suggesting that a tarriff on one item that is likely the response to a dizzying array of tarriffs and counter tarriffs is a basis for disolving the friendships that many nations share with the US? Or are you trying to indicate that this one item reflects a patern of the US raising trade barriers while the rest of the world pristinely lowers them despite all internal costs?

I'm not going to claim that the US is right on this individual tarriff. I am not going to point to an individual tarriff of the EU and say, see, this justifies that. I am going to say that the international trade game is more complex than most of us can even imagine, and that it is not inconcievable that some tarriffs could be raised at the same time that tarriffs in general are falling.

 

[Daaraa]

I support a tariff to prevent dumping. However, I do not support a tariff to prop up a failing industry.

I am in favour of the steel tariff to tax foreign dumping. If the steel industry in the US can support itself and not fail, great. If not, remove the tariff. There needs to be more proof as to whether the steel industry in the US is suffering from foreign tariffs or from domestic reasons.

I have seen 1st or 2nd hand in 3 different industries what foreign dumping can do.

1 Ship Building
2 Apples and Produce
3 Equipment and parts for Nuclear plants.

There are countries who heavily subsidize ship building upwards to the tune of 60%. The Government of Canada refused to slap a tariff on those counties. The ship building industry is almost dead in the twelve years since the major subsidies started happening.

China dumps apples on the US market. Mainly in the form of apple juice. The domestic producers of apples in the US lost that part of the market that was needed for them to stay profitable. The laws on how things are grown in the US are strict for good reason (DDT etc). However, these same growing laws do not apply in China. And almost all of the banned chemicals in the US would be undetecable after apple juice processing. Cosequently, most apple growers in the US are having to push out the apple orchards in favour of other things to stay profitable.

Basically the same thing with Nuclear parts and equipment as ship building (This is the 2nd hand account.)


I do not support the tariff for softwood lumber the US has imposed on Canada citing that Canada is indirectly subsidizing Canadian lumber companies. However, there has been to proof or answering of the charges so to speak by the US. Canada has been trying to resolve this diplomatically but the US and the huge lumber companies (who's lobby group is much larger and influential than the US Homebuilders group who want Canadian lumber because it is less expensive) have been dragging thier collective feet.

I believe the showdown will happen at the WTO and they will rule in favour of the "tariffed" nations because imports are down as cited by MrPresident and Greadius.

Tariffs are imposed because of other things going on behind the scenes as mentioned by knowltok2.

Canada briefly imposed a "beef ban" on Brazilian beef citing potential "mad cow disease" last year. This was so obviously connected to the Canadian/Brazilian dispute over airplane construction subsidies.

The Banana example with the EU as cited by knowltok2 is another perfect example.

The Romanian steel industry as cited by polymath is an example of fishy-smelling-political-stuff and is protectionism, but for money and elections and could easily backfire on Mr. Blair.

These examples of unfair and unjustified tariffs involve so many nations that almost no nation is "lily-white" and should not "cast the first stone" as almost all tariffs are imposed for unfair reasons.

 

[knowltok2]

Now here is someone who knows a little about tarriffs and international trade. Thank you.

 

[MrPresident]

The Banana example with the EU as cited by knowltok2 is another perfect example.

Let me clear something up, the EU didn't put a tariff on bananas. It was the US who threatened to put tariffs on goods such as Italian cheese and Scottish wool. The EU had an import quota on bananas from the Caribbean, mainly former European colonies. This was done as part of a development policy of the EU, e.g. "trade not aid".

I don't think America (and by implication Americans) realise the level of dissatisfication with America's recent actions with regards to the "Axis Of Evil". The French foreign minister made a scathing attack on Bush and his foreign policies. When war with Iraq comes (and in all likelyhood it will) then only Britain will supply resources to help fight it. Now most Americans probably don't care about this but it is important because with 300+ million people, Europe is bigger than America. Also after the Nice treaty the way is clear for many Eastern Europeans countries to join up by 2010, so the number of countries will go from 15 to 23. The days of America being the world's only superpower are over. I'm not saying that Europe will be in a position, or want to, to attack America (or anything like that) but America's influence on the world will surely fall as a result.

Now as for the benefits of the EU's common external tariff policy it is certainly debateable. However for this tariff the US is wrong, simple as that. The steel is not being dumped and the WTO will rule as such. The American steel industry is inefficient and hasn't gone through the same restructuring and modernisation of other developed nations. This tariff is the result of pork barrel policies and nothing more.

That statement sounds so British. He is no acting illegal by any U.S. laws

I am not sure why the statement sounds British and whether or not a statement can ever sound British. Also I am not sure whether is this a complient or not. Either way, Bush is acting illegally. America signed up the WTO in 1944 (called something different then I think it began with a G). I know Bush doesn't understand the legality involved with international treaties but by WTO rules Bush's actions are illegal. The EU has already filed a complaint to the WTO and this will be heard probably between 6 months and a years time. So in fact Bush is acting illegally maybe not by US law but his country signed a treaty which is binding.

 

[sgrig]

Originally posted by MrPresident

Let me clear something up, the EU didn't put a tariff on bananas. It was the US who threatened to put tariffs on goods such as Italian cheese and Scottish wool. The EU had an import quota on bananas from the Caribbean, mainly former European colonies. This was done as part of a development policy of the EU, e.g. "trade not aid".

I don't think America (and by implication Americans) realise the level of dissatisfication with America's recent actions with regards to the "Axis Of Evil". The French foreign minister made a scathing attack on Bush and his foreign policies. When war with Iraq comes (and in all likelyhood it will) then only Britain will supply resources to help fight it. Now most Americans probably don't care about this but it is important because with 300+ million people, Europe is bigger than America. Also after the Nice treaty the way is clear for many Eastern Europeans countries to join up by 2010, so the number of countries will go from 15 to 23. The days of America being the world's only superpower are over. I'm not saying that Europe will be in a position, or want to, to attack America (or anything like that) but America's influence on the world will surely fall as a result.

Long live the EU!! And down with USA!

(I'm not being sarcastic)

PaleHorse76: No, but you are being banned! Unfortunately I am kidding but I do detect a hint of spam and would like for you to remove it from this thread, thank you.

 

[TrailblazingScot]

To keep things short and simple:

The American tariff on steel is likely to generate more tariffs being setup by other countries on other products and thus reduce international trade as foreign (or at least outside trade zones like the EU) products will become more expensive and thus less desirable.


As one tarriff will encourage tarriffs on other products by nations wanting to protect their home industries it can lead to trade wars and in general less international trade especially affecting countries dependent on foreign markets.


The reason for protecting the steel industry in the USA -apart from politics- is strategic as having a home steel industry means you aren't dependent on imports. In the same way having "home" arms industries is of great value the same is true of steel (vital for so many war products). In the context of an America very jittery about its safetly I think we can see another angle on why the need to protect home production. Or it is merely to win votes and repay vested interests that support the Republican Party

 

[MrPresident]

The reason for protecting the steel industry in the USA -apart from politics- is strategic as having a home steel industry means you aren't dependent on imports.

I'm sorry but I don't buy this argument. Isn't the most stragetic resource of all, oil. America relies heavily (as does the rest of the world) and Arab states for a lot of their oil supply. Many say that was the main reason for the Gulf war. The steel industry itself relies on imports in the form of raw materials, orc. Many other important industries that could be classed as stragetic also rely on imports, chemical, rubber, arms etc. Also what would you class as relying on imports? 20%? 40%? 60%? I thought the policies of Autarky (self-sufficiency) were long dead as they have proved to be damaging too everyone, especially the consumers. Surely in todays world of globalisation the need to keep strategic industries going in your own nation has less and less meaning. America would only have a problem in this way is if there was a world war cutting off America from its suppliers in say Europe, South America and Asia. Now I my be considered an optimist but I think this is highly unlikely. The Cold War is over its time people like you realise this.

 

[Daaraa]

I agree with kittenOFchaos in that other tariffs will be imposed. This will reduce international trade overall. Unjustified tariffs tend to happen more during economic slow downs.

The tariff does seem to be aimed at Pacific Rim countries.

Time to speculate. I think it may have something to do with China and the apple thing as there has been quite a bit of hype from US politians about farm land no longer being farmed in an apple producing area. I know that there were some meetings between some major US Senate seat holders and the US Apple Industry about 4 months ago just after the apple harvest finished and they realised that they are going to lose an additional 15-18% of apple orchards. This is not as obvious as the Canadian/Brazil fiasco I mentioned earlier but it sure stinks of fish.

However, the US knows that it will take 6 to 12 months for a hearing to take place. In that time fram, they are probably betting on breaking the Chinese resolve. The complaint filed by the EU will be heard in 12 to 15 months with the help of US foot dragging, the WTO will rule the tariffs are illegal and the US will comply with the WTO and lift the tariff after having accomplished the goals they set out for in the Chinese thing.
Done speculating.

The US protecting the steel industry is strategic as mentioned by others. The UK should do the same thing however, Mr. Blair is assuming the UK will always be friendly with current steel makers.

I am not bashing Americans nor am I bashing the EU. I feel that some of the EU member nations are currently suffering from the same complex Canadians suffer in an inferiority complex with the US.

The steel trariff is like Civ 3 when you see Oil or another resource just inside your neighbors border and it is thier only source. What do most people do? Go to war or annex the area to get the resource so that you won't be dependant on importing Oil.

The US is going to war (tradewise) and they have a set of goals to accomplish. Maybe it is the China thing I mentioned. Maybe it is not. They will want to accomplish those goals in less than 12 months. And the goals are better than the costs associated with the tariff (counter-tariffs) or else they wouldn't launch the war.

The average American seems to realise the implications of the "Axis of Evil." The media just isn't talking about it because the wounds inflicted on Sept. 11 have not healed yet. I do agree that Americans can come off as arrogant but most of it is based in thier education system and loathing or fear of the unknown or unlearned.

I still feel steel is being dumped on the US market. Just not from the EU's side. But a one sided tariff against China or Japan would really set off a trade war a little to quickly. The US preferred a foot dragging world wide tariff.

A statement can sound British if it comes across as equally arrogant as an American statement. The British notion of "Pax Brittania" (sp) or Rule Brittania (sp again) still comes out in some worls stage dealings the UK has with other countries. I am not saying it is meant to. I am saying that that is how others will percieve it. An American statement sounds arrogant when it comes across as wanting to Americanize something or America is #1 and there is no 2nd. This tends to happen in the school system. There are thousands of good places to live in the world outside the US but most Americans don't see it.

I also feel that country bashing is just stupid and childish. Canada is a great country to live in. I also know that it is not the best for everyone. It is great for me. I just accept that other countries have thier good in them and try not to feel inferior to what I think are greener pastures on the other side of the ocean.

I really don't like France or much that has to do with french. I speak french fluently. I understand a lot of the culture. But I don't like them. I don't go France bashing though. BTW I also think france and the UK suffer a mutual inferiorty complex with each other although I don't know why.

Every country has support no matter what the situation. Iraq seems to have France. The US has either the UK or Canada and Mexico. Russia has a lot of former East Bloc countries. China has Vietnam, N. Korea etc.

There, I think I've addressed all the issues.

 

[knowltok2]

Originally posted by sgrig


Long live the EU!! And down with USA!

(I'm not being sarcastic)

Bad day? Ussually you add to reasonable, rational conversations instead of firing off drivel such as this. I hope tomorrow is a better day for you.

(I'm not being sarcastic either)

 

[Daaraa]

I'm not sure if you're talking to me MrPresident but the same questions apply to me as I support kittenOFchaos' idea of strategic value of supporting the US Steel industry.

Oil is number 1. That is for sure. However, steel is important as well. Most of the raw materials of the steel industry in the US comes from Canada and I don't think the US feels threatened by Canada turning against them.

The cold war is over, but some Americans, especially the older generations, tend to still feel wary of another world war and so they don't want to be caught with thier collective pants down so to speak.

According to my classes in college, 50% or more imports is relying on external suppliers. However I feel it is more like 33% or more.