Steel Tariffs Appear to Have Backfired on Bush

Playing politics with trade has backfired on Bush. Steel tariffs cost more jobs than they saved, have hurt him politically.

A study backed by steel-using companies concluded that by the end of last year, higher steel prices had cost the country about 200,000 manufacturing jobs, many of which went to China. Small machine-tool and metal stamping shops say they have been decimated by steel costs that rose in some cases by as much as 30 percent.

Investments that flooded into the protected steel industry over the past 18 months brought idled steel mills back on line and kept teetering mills from shutting down, said Peter Morici, a University of Maryland business professor hired by the steel producers. That resurrected 16,000 steel jobs, and more than 30,000 jobs when steel suppliers are included.

The tariffs failed to give Bush the allegiance of the United Steelworkers of America, the industry's largest union and one the White House had hoped to win over. In August, the union endorsed Rep. Richard A. Gephardt (Mo.) for president and issued a statement saying any of the Democratic candidates would offer better than "the reactionary policies of the current administration."

Perhaps worse for Bush, the tariffs alienated thousands of small businessmen who run steel-consuming companies. "He didn't win the steelworkers over, and he sure as hell didn't win the users over, and there are a hell of lot more of us," said Jim Zawacki, chief executive of G.R. Spring & Stamping, Inc., a small manufacturer in Grand Rapids, Mich. "A lot of people feel burned," said Mike Lynch, vice president of government affairs at Illinois Tool Works, a large machine tool company outside Chicago.

Political divisions over the tariffs remain fierce, even within the GOP. Sen. Arlen Specter (Pa.), who talked to Bush about the issue this week, contends the tariffs "are saving thousand of jobs in the steel industry, and you had a steel industry headed for more bankruptcies."

Sen. Lamar Alexander (Tenn.), however, insists the tariffs have "shifted more steel-consuming jobs overseas than exist in the steel-producing industry in the United States," causing thousands of layoffs and closing the doors of hundreds of small businesses that supply automakers in Tennessee, a state that Bush won by just 4 percentage points and is counting on for his reelection.