One More Dagger in the Heart of Labor

David Macaray

Riddle: When does a polemicist know he’s pretty much reached the end of his string? Answer: When he is convinced that a polemic is definitely in order—that somebody needs to be raked over the coals—but can’t determine who that “somebody” is.

And so it was with President Bush’s 2002 U.S. steel tariff. With nearly thirty U.S. steel companies having declared bankruptcy in the years leading up to it, and with organized labor and self-respecting Democrats pleading for action, the staunchly Republican, anti-union, free trade advocate George W. Bush placed tariffs of between 8% and 30% on steel imports.

Because steel tariffs at the time were between zero and 1%, Bush’s tariffs (even though U.S. steel manufacturers, the United Steel Workers, and Congressman Richard Gephardt, among others, felt the restrictions weren’t severe enough) stood out as mind-numbingly radical. It should be noted that Canada and Mexico were exempt due to penalties that would have been imposed on the U.S. by the North American Free Trade Agreement (NAFTA).

The responses were predictable. U.S steel manufacturers and organized labor generally rejoiced, figuring it was about time the government addressed the “dumping” of foreign steel on the U.S. market.

Predictably, conservatives and free trade fundamentalists felt betrayed and confused. Academic observers feared that access to cheap steel would result in businesses failing and workers losing their jobs. And of course, cynics accused the move of being “politically motivated,” which it undoubtedly was.

In regard to the politics, two possible “swing states” in the 2004 election, Pennsylvania and West Virginia, would clearly benefit from the tariffs. But Bush argued that not only had his father and Ronald Reagan both imposed limits on foreign steel, he himself had made the move to save the American steel industry, which everyone except Wall Street considered worth saving. The tariffs became reality on March 20, 2002, and were set to stay in effect until 2005.

In addition to the domestic controversy, there was international outrage as well. The European Union (EU) threatened to launch a full-blown a trade war against the U.S. by imposing “retaliatory” tariffs of its own, and filed a formal protest with the World Trade Organization (WTO).

Not surprisingly, the WTO, in November of 2003, came out against the tariffs, claiming they violated provisions of the WTO’s tariff agreement. Accordingly, the WTO threatened to impose $2 billion in sanctions against the United States (the most expensive penalty ever authorized by the WTO against a member nation) if the tariffs weren’t immediately revoked.

Unwilling to appear intimidated, Bush refused to rescind them. In response to Bush’s defiance, the EU, indicating just how savvy it was in regard to American politics, threatened to impose tariffs on oranges grown in Florida and automobiles manufactured in Michigan. Florida and Michigan—two critical states in any presidential election. Bush backed down. The tariffs were withdrawn in December of 2003.

So who’s the villain here? At whom do we direct our polemics? Protectionism? Trade agreements? Globalization? Innovation? Smoke-stack industries (as opposed to “new technology”)? What about the “amoral” stock market itself? As the middle-class continues to be eroded, the stock market continues to set all-time records.

One reason for the stock market’s astonishing success is the fact that, with the world shrinking and the economic lines between “Us vs. Them” blurring, investors all over the world are rooting for the success of those rapidly growing foreign industries.

Alas, while there may be a “global economy,” there’s no such thing as a “global address.” Working people don’t live “globally.” They live at home and work nearby. Wiping out a few thousand factories, and relying on foreign labor to fill the void, may stimulate the stock market, but it ain’t doing the American worker any favors.