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Press Release

    Steel Trap

    03/01/2002

    ABSTRACT FROM CATO

    The attempts to restrict free trade of steel through tariffs will impose costs that dwarf the benefits, and even the benefits will expire after a short time. The Bush steel tariffs will likely prompt a response from the WTO, which will respond by placing restrictions on other U.S. exports. In addition, domestic consumers of steel, normally other producers such as the automobile industry, will face higher costs than before. By ‘protecting’ the industry, the tariffs also encourage inefficient steel producers to stay in the market, consuming resources at less-than-optimal conditions. While the government supports the current practices of steel production, if the steel was sold in any foreign market, the company could be guilty of dumping. Since there are no restrictions on domestic dumping, however, the practice is allowed. Consumers and other industries are hurt by the steel tariffs and the inefficiencies they create and support, so the protections actually hurt domestic industry.

    Full Report Link:
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