STEEL INDUSTRY Tariffs' end puts Bush in middle

Bush promises to monitor imports to guard against a flood of foreign steel.
WASHINGTON (AP) -- By scrapping steep tariffs on imported steel, President Bush puts himself in the middle of an electoral brawl between Midwest and Rust Belt states he will need to win re-election, even as he averts a global trade war targeting other political battlegrounds.
Minutes after the White House announcement Thursday to repeal the tariffs, Democratic presidential candidates lambasted Bush as shunning the U.S. steel industry by caving in to threats from global trading partners.
Even more telling, Republicans who usually ally with Bush from politically key Rust Belt states declared their dismay in what Rep. Bob Ney, R-Ohio, described as "bad news" and a "disappointing setback."
But the decision will surely endear Bush to manufacturers of automobile parts, refrigerators, door hinges and hundreds of other steel products in just-as-politically-crucial states in the Midwest that eluded him in 2000.
"There's no question it will help," said Rep. Joe Knollenberg, R-Mich., who represents 1,500 auto parts businesses in his district and fought to end the tariffs when they were imposed in March 2002. Bush lost Michigan in 2000 by a slim 217,000 votes out of more than 4.1 million cast.
Michigan, along with Minnesota and Wisconsin, account for a total of 37 of the 270 electoral votes needed to win next year's presidential election. The key steel-producing states of Pennsylvania, West Virginia and Ohio hold 46.
Threats from the EU
Facing the threat of a trade war, Bush lifted the nearly 2-year-old tariffs but promised to continue monitoring imports vigilantly to guard against a sudden flood of foreign steel entering the country.
Bush's decision -- a turnabout from his own policy -- came in the face of threats by the 15-nation European Union to retaliate with $2.2 billion in duties on U.S. products such as Florida oranges and pajamas made in the Carolinas.
Analysts said the list of products was carefully chosen to put pressure on Bush; sanctions could have created significant political pain for him in next year's race.
Within minutes of Bush's decision, the EU withdrew the threat, which was based on a World Trade Organization ruling that the tariffs were illegal.
Temporary measure
The tariffs, covering a wide range of steel products, had been scheduled to remain in effect for three years, until 2005, to give U.S. steelmakers protection from foreign competition. Bush said the tariffs had been imposed to give the domestic industry critical time to modernize and to protect jobs.
"These safeguard measures have now achieved their purpose, and as a result of changed economic circumstances, it is time to lift them," the president said in a statement.
U.S. Trade Representative Robert Zoellick said that neither political calculations nor the EU threat directly contributed to Bush's order. But, Zoellick said, "the politics are part of trying to accomplish an agenda" and "this one worked out pretty darn well."
With 41 steel companies nationwide declaring bankruptcy since 1997, the tariffs are politically symbolic in states such as Pennsylvania, Ohio and West Virginia, where the industry once thrived. If next year's presidential election is decided by a small margin of voters -- as it was in 2000 -- the tariffs may be enough to tip the balance in those swing states, said Ben Fischer, a labor relations professor at the H. John Heinz School of Public Policy at Carnegie Mellon University in Pittsburgh.
"There are a lot of people who still feel an identification to the industry," Fischer said. "I have no friends who are steel workers, but all feel that this community somehow revolves around steel."