We can appreciate a president who is big enough to admit when he’s made a mistake. It’s even more gratifying when such conversions come in reference to some matter of high principle or personal conscience. But we see none of that in news that President Bush is preparing to reverse himself on a tax (“tariff” is the preferred euphemism) he slapped on foreign steel imports 20 months ago.
It was a misguided effort to prop-up domestic steel manufacturers and win votes in the Rust Belt that instead pushed the United States to the brink of an international trade war from which a red-faced White House now retreats.
The electoral calculations of White House political guru Karl Rove obviously weighed heavily in the decision to impose the tariffs, which stood in jarring contrast to the president’s free-trade rhetoric. The surrender of free-trade principle for short-term political advantage was an early example of the unhealthy influence Rove exercises over White House policy and a reminder that he isn’t quite as smart as he imagines he is.
The tariff was a wrong-headed approach to improving American industrial competitiveness and predictably backfired on Bush. It will apparently be of little long-term benefit to U.S. steel makers. But it drove up the price of U.S. goods manufactured with imported steel, risked stalling a reviving economy and brought the threat of retaliatory action from angered trading partners.
Nor did it accomplish another White House goal: to win Bush the endorsement of the United Steelworkers of America — they’ve thrown their weight behind the even-more protectionist Rep. Richard A. Gephardt.
The president’s present reversal of course wasn’t prompted by some recognition that the policy was wrong, however. It came following a ruling last month by the World Trade Organization that the tariffs were illegal. The WTO threatened to level fines of up to $2.2 billion on American exports. Japan and the European Union said they would impose counter-tariffs on citrus products from Florida and American-made motorcycles, farm machinery and textiles.
In the minds of Rove and other White House political handlers, the economic and political pain likely to result from such a trade war simply outweighed whatever the administration hoped to gain through protectionism.
Let’s be clear. We oppose the tariffs not because we believe the WTO or any other international body should dictate what’s in America’s economic or national security interests; we do it because most attempts at protectionism are self-defeating for a nation that not only likes to pose as a champion of free trade, but actually has much more to gain than to lose from free and fair trading policies.
One news account indicated White House aides were “agonized” over what options to present the president concerning the tariff reversal, in what some reportedly believed was “one of the diciest political calculations of this term.” But is this any way to make national economic policy — via some cynical political calculation pitting Rust Belt steel manufacturers against Sun Belt citrus growers? Administrations that stand on bedrock principles need not bother with “agonizing” over such self-defeating manipulations.
Meanwhile, anticipating the fallout that will follow any policy reversal, the White House is reportedly bracing for blistering criticism from the very states, industries and trade unions that Rove was trying to woo with the tariff.
In a bid to retain the tariff, steel executives and elected officials are frantically pushing for a White House meeting with … well, no, not the president. They reportedly want to meet with the president’s brain, Karl Rove.