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Monday, 4 March, 2002, 22:56 GMT
Steel trade war looms
Steel protestors
Steel workers are demanding help for their industry
President George W. Bush is preparing to slap punishing tariffs on foreign imports of steel, according to press reports.

But key trading partners are already voicing their opposition, raising the likelihood of a bitter trade war.

Workers in the steel industry have anxiously been waiting for Mr Bush's decision which will officially be revealed on Wednesday.

The workers have been demanding that the President introduce 40% tariffs on foreign steel.

That would, they claim, reimburse the country for the damage done to its industry by cheap imports.

But US steel consumers, such as car makers, say that level of tariff will increase their costs dramatically at a time when they are fighting to be competitive.

EU opposition

According to US newspaper reports, Mr Bush will announce a mixture of quotas and tariffs of up to 20-30% on some key steel imports.

The import restrictions will most heavily penalize China, Germany, Japan, South Korea and Taiwan.

On Monday, the UK government said that it would support EU action against US tariffs on steel imports.

And a senior Japanese official also said that it may file a complaint to the World Trade Organisation if the tariffs are imposed.

Squeezing car makers

There is also some feeling against the tariffs within the US.

David Phelps, president of the American Institute for International Steel, says that the US steel industry cannot make sufficient quality and quantity of steel for US consumers.

"We believe any additional tariff on imports would simply squeeze the US consumers of steel to a point where they are rendered internationally non-competitive," he told the BBC's World Business Report.

But steel workers say that, without the protectionist measures, the whole US steel industry could become obsolete.

Tough call

The decision whether to impose the tariffs - and risk a trade war - is a tough one for Mr Bush both politically and economically.

A decision to impose the punishing tariffs of up to 40% is sure to upset some of the US' key trading partners.

But failure to take action will anger workers - and voters - in steel-making states.

Thousands of workers have already lost their jobs after numerous US steel firms have gone bust over the last few years.

Last week, hundreds of angry steel workers protested outside the White House, urging Mr Bush to apply the punishing tariffs.

 WATCH/LISTEN
 ON THIS STORY
David Phelps, US Institute for International Steel
Any additional tariff will squeeze the US consumer
See also:

01 Mar 02 | Business
US steel workers stage mass protest
07 Jun 01 | Business
Slowdown fuels US steel aid
27 Dec 00 | Business
EU-US trade dispute looms
26 Nov 00 | Business
US faces $4bn trade threat
05 Jun 01 | Business
Bush seeks steel probe
06 Jun 01 | Business
EU opens attack on US steel probe
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