US Loses WTO Steel Appeal

A trade war could erupt if US President Bush fails to accept a World Trade Organization ruling that American steel tariffs are illegal. The EU and Japan said they would impose as much as $2.3 billion in sanctions on U.S. products including tobacco, fruit juice, and frozen peas unless Bush complies with the WTO ruling. Bush originally ordered the steel tariffs 20 months ago in order to give the suffering industry time to restructure and shrink in response to growing foreign competition. However, officials in steel-reliant industries argue that the duties have masked price increases that have raised their production costs and hurt their competitiveness. One company executive maintained that Bush’s tariffs protect only a single U.S. industry, while neglecting the overall plight in manufacturing. The broader problem, he claimed, is growing competition from cheaper foreign goods, especially from China. – YaleGlobal