Those awful steel tariffs again, and why George Bush should run away from them screaming.
Today the World Trade Organization ruled that the foreign steel tariffs imposed by the Bush administration in 2002 are illegal. Good. They should be scrapped forthwith.

I think the steel tariffs are my #2 disappointment with the Bush administration. They were clearly a shameful sop to a fantastically inefficient industry with production locations scattered throughout midwestern states, like Ohio and Pennsylvania, critical to any successful presidential bid. It's a disgraceful attempt to buy votes by granting lpreferential treatment, which we as consumers (and some who are now unemployed) pay for collectively.

There are some 160,000 steel producing jobs in the US. There are some 12M jobs with companies which consume steel. Every one of those companies pays a higher price for raw materials today as a result of these tariffs; those companies which can pass on higher prices to their customers do so, making (for example) cars more expensive for consumers. Fewer cars get bought when they're more expensive, which itself costs jobs. Several estimates suggest that the cost to the US economy of these tariffs has been on the order of 200,000 jobs, more than the entire steel industry employs. I could go on with this analysis, but few disagree that on balance the tariffs are economically far worse than the ills they mean to cure. The real question is what any of this means politically.

Now the cold political calculus for Bush is what to do about the latest WTO ruling. He could stand his misguided ground and allow the tariffs to ride out the remaining sixteen months before their scheduled termination; he could scrap them immediately; or he could come up with some compromise approach. No comment yet from the administration on their intentions.

Memo to Karl Rove: The Steel Workers Union is so grateful for President Bush's politically bold and economically destructive stance on the tariff issue, that they've already endorsed Dick Gephardt for President in 2004. They didn't even wait to see whether Bush would maintain the tariffs first, which suggests that to them it doesn't matter to them in their decision whom to vote for. And let's face it, Labor is going to endorse a Democrat, without fail, no matter how ludicrous his politics. Even adopting preposterous Democrat-style policies like this terrible steel tariff won't earn George Bush the endorsement or gratitude of the labor unions.

So union types are going to vote against any unnamed Democrat running for President, regardless of what Bush does here. But the unclaimed middle of the electorate continues to be bombarded with claims by Daschle & Co of the number of jobs lost by This President, as they refuse to speak his name (it burns the ears to hear it!), which actually might influence some of them who are presently undecided.

There's not much point in enacting a bunch of tax cuts as a haymaker of a stimulus, and then simultaneously enacting protectionist policies which both cost the economy jobs and add an artificial component of inflation as we struggle to emerge into a real and recognizeable expansion. All that gives you is a fat budget deficit, while minimizing the positive impacts of the tax cuts. It's bad, and it's dumb economics I'd expect more from Democrats. But again I digress into the universally agreed economics of the thing.

The world politics are just as important here. Pascal Lamy has threatened retaliatory tariffs, and implied that these might be aimed at politically important states themselves. The point is that every job lost on account of these tariffs, or on the EU's or Japan's retaliatory tariffs, gives the Democrats more ammunition during next year's election. Bush has got exactly zero love from an industry which clearly dislikes him despite enacting the tariffs they wanted. So I say cut 'em loose and focus on the economics, for sake of the undecided middle who actually would consider voting Republican.