The case against steel tariffs.

In a recent article entitled "Foreign Nations Target U.S. Steel" (November 29, 2004 issue), Mr. William Jasper presents many good facts, but none of these justify the reenactment of steel tariffs!

Steel tariffs would help steel producers in the United States, but they would hurt everyone else. Early in the article, Mr. Jasper points to one American entrepreneur who uses steel in his product, the Agri-Trac. If steel tariffs are reimposed, this will add to the cost of steel, not take from it. This would only hurt steel-using industries like the Haws Agri-Trac. The article itself testifies to this fact when nothing that (after the removal of steel tariffs) "the supply is still tight, but Haws says at least he can get it."

In the article, Mr. Jasper also points to "dumping" by subsidized foreign industries as a problem. Here he is dead wrong. Yes, foreign companies subsidized by their governments do sell steel at rates lower than which they would otherwise be able. While this is a benefit to their country's steel industry and a detriment to ours, as a whole this is to the benefit of the U.S. and a detriment of their country's economy.

This can be seen by reductio ad absurdum. What if a foreign government subsidized their steel industry to such an extent that it effectively removed all cost and this steel industry was able to "sell" steel on the U.S. market for free? This would devastate the U.S. steel industry as they could not compete with the price, but it would be a boon to the American industry as a whole which would be getting steel paid for by foreign taxpayers. While this scenario is indeed absurd, subsidized steel is precisely the same thing to a lesser degree. U.S. industries that use steel are getting part of the price of steel paid for by foreign taxpayers. They would be idiots to refuse "free" steel, or half price steel, or even steel slightly below a competitor's price.

Finally, Mr. Jasper defends steel tariffs as being necessary for defense. Currently, the U.S. is involved in numerous military activities around the globe, which may or may not be classified as defense. However, it is at times like these that the military needs the most steel for new weapons and weapons repairs. Reimposing steel tariffs would only serve to drive up the price of steel, thus making more costly to acquire military equipment.

Mr. Jasper points out much-needed information in his article. He also draws two very important and very true conclusions, that we should unshackle our energy resources and producers and that we should stop funding our competitors and enemies. Yet, his first conclusion, to reimpose Sec. 201 tariffs, is precisely wrong. It is an example of government intervention to fix a prior government intervention. Instead, we should follow Mr. Jasper's other conclusions and allow our industries to freely compete. Steel tariffs would help our steel industry, but it would hurt all domestic steel-using industries and hurt consumers through higher prices for steel and products that use steel.

JONATHAN INGRAM

Cedartown, Georgia 

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