Will The Steel Tariffs Remain

August 8, 2003
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GRAND RAPIDS — If President George W. Bush next month rolls back his 30 percent tariff on steel, both of West Michigan’s Congressmen will be delighted . . . and likely amazed.

What worries Vern Ehlers, R-Grand Rapids, and Peter Hoekstra, R-Holland, is that — as of last week — the White House had not responded to their repeated urgings that the president roll back the tariff, which he can do in September.

Both legislators point out the tariff impact simply gives U.S. steel makers a way to add 30 percent with impunity to the prices they charge to manufacturers who use steel — including Steelcase, Herman Miller and Haworth, plus every tool and die and mold-making operation in West Michigan.

“Steel tariffs just kill us in terms of jobs in West Michigan,” Hoekstra told the Business Journal.

Ehlers said tariffs on imported steel are costing the jobs of manufacturing workers here. He termed the furniture industry and their suppliers and automotive suppliers, as “voracious consumers of raw steel, and the administration’s decision has increased their manufacturing costs when the recession was at its height and they could least afford them.

“When you take a more holistic view of the challenges these manufacturers face, from low wages in China to rising health care costs,” he added, “you quickly reach the conclusion that rising material costs coupled with other challenges are undermining their competitiveness.”

Hoekstra said he’s worried that though the steel tariff is temporary, the jobs disappearing because of it may be gone for good.

“I’ve got people all over my district who are saying, ‘Pete, I’ve got to move the component manufacturing overseas.’ And they don’t say it —but I know it — once they move a process overseas, it is very, very tough to get it back here.

“Some of these companies haven’t been overseas before,” Hoekstra added, “and once they put the systems in place to buy stuff overseas they start feeling comfortable about it and they can use it with other components.”

Ehlers agreed, arguing that the White House’s policy — clearly intended to drive up domestic prices for steel —  drives manufacturing overseas.

Both legislators fear the administration will persist in what they believe is a fruitless appeal to a World Court ruling that found the tariff unlawful.

“All indications are he (Bush) is going to appeal it,” Hoekstra said. “I don’t have any inside information to the contrary.”

And what will happen when the appeal fails, he and Ehlers said, is a matter of public record: European governments have announced they will impose protective tariffs on certain products produced in the United States, some of them from the upper Midwest

“So that means we’re in for a double whammy,” Hoekstra said.

Ehlers, who reported that he recently chaired a hearing on manufacturing research and development, said he also is concerned about the loss of domestic R&D efforts due to the loss of manufacturing.

“We received testimony stating that sustained domestic manufacturing depends on innovation,” he said, “and that, as our domestic production moves overseas, so does that research and development associated with those industries.

“This is a truly disturbing trend, as innovation has always been a key component in our domestic economy.”           

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