STEEL TARIFFS Nations send warning to U.S.

Italy warns of an unprecedented trade war.
WASHINGTON POST
WASHINGTON -- A chorus of steel-exporting nations from Japan and China to Norway and the European Union urged the United States to scrap its heavy duties on steel in compliance with a World Trade Organization ruling or face retaliatory tariffs on a broad array of American exports.
"We want to ward off a commercial war that, in terms of its size, would be unprecedented," Adolfo Urso, Italy's Industry Ministry undersecretary in charge of foreign trade, said Tuesday.
"Should the United States refuse to terminate its illegal practice, we will notify the WTO of our retaliatory measures based on the overall losses," Shoichi Nakagawa, Japan's minister of Economy, Trade and Industry, said.
The WTO issued a final ruling Monday that the steel tariffs imposed by President Bush violate international trade rules, raising expectations that the White House will soon repeal the tariffs to avoid imminent retaliation.
The WTO decision gives the European Union and several other countries the right to impose retaliatory tariffs on billions of dollars worth of American exports unless Bush reverses the decision he made in March 2002 to give American steelmakers protection from imports. Such sanctions could be the largest ever applied in a WTO case.
Political implications
The situation leaves Bush with an unpleasant political choice less than a year before the next presidential election. If he abides by the WTO ruling and rolls back the steel tariffs, he would anger voters in key steelmaking states such as Pennsylvania, Ohio and West Virginia.
But if he maintains the tariffs, he would risk angering industries in other states that would be hurt by the retaliatory duties. The list of targeted products includes many that were clearly chosen for their political impact: Tariffs on citrus fruit, for example, would hit the pocketbooks of voters in Florida, and the duties on textiles would hit industries based in the Carolinas.
White House spokesman Scott McClellan said Bush has not yet made a decision. But sources close to the White House say the administration's economic team has united in imploring Bush to scrap the tariffs rather than let them stay in effect until their scheduled expiration in March 2005.
Perhaps more important, one source said, Karl Rove, the president's top political adviser, now believes the tariffs have cost Bush more political support among steel-using industries and conservative free-trade advocates than the political good will he gained from their imposition.
U.S. industries that use steel, such as makers of appliances and autos, have also been pressing for a repeal of the tariffs, complaining that higher steel prices are eroding their profits.
If the steel tariffs remain in place, the EU would add to many American exporters' woes by imposing punitive duties ranging from 8 percent to 30 percent, starting in mid-December, on $2.2 billion worth of American goods, including motorcycles, citrus fruit, textiles and farm equipment. Seven other countries backing the EU case -- Japan, South Korea, China, Brazil, Switzerland, Norway and New Zealand -- could impose additional sanctions.