In slamming 30 percent tariffs on imported steel, President Bush did more than keep his word to U.S. steelworkers. He sent a Reaganite message to the world: "I'm a free trader, but I put America first."
Just as Ronald Reagan imposed quotas on steel being dumped in the United States in the 1980s, Bush has decided that U.S. national interests and America's steel industry will not be the next sacrificial lambs thrown up on the altar of the Global Economy.
Though threatened with a trade war, the president did not buckle or back down. Good for him. Economic patriotism may just be back in style. And if the European Union decides to haul us before the World Trade Organization for a caning, the president should tell the WTO to take a hike. If Europe wants a trade war with the United States, let it begin here.
For, no matter the pain, these annual $300 billion trade deficits in manufactured goods must stop. We cannot sustain them; we cannot survive them. They will sap our dynamism, gut all of our industries, put an end to our economic independence and undermine the foundations of our military power. As Holland, Spain and Britain can all testify, Great Powers that chronically import more than they export soon cease to be Great Powers.
Look at the numbers: From 1990 to 2000, the United States ran a cumulative trade deficit in manufactured goods of $1.6 trillion. And what were the returns from the celebrated trade deals negotiated by Bush I and Bill Clinton -- NAFTA, GATT and MFN for China?
Between 1990 and 2000, the U.S. merchandise trade deficit with all the WTO nations, including the EU, grew 300 percent. Our merchandise trade deficit with China grew 700 percent. Our merchandise trade deficit with Mexico exploded by 1900 percent. Those who cut and sold these deals will one day have to answer before the bar of history for what they did to America.
Justice, as well as the national interest, supports Bush's stand in defense of the U.S. industry. In each of the last five years, steel imports have exceeded 30 million tons, as 31 U.S. steel companies have had to file for bankruptcy. In the last two years alone, 46,000 more steel jobs disappeared and another 19 percent of our capacity was lost.
To pundits who sniff that the U.S. steel industry is inefficient and should be allowed to die, Rep. Peter Visclosky, D-Ind., replies: "Since 1980, the industry has spent $60 billion to increase efficiency. Productivity has increased 156 percent, and man-hours per ton have declined from 10 to 3.5. Today, no one produces a ton of steel more efficiently than American steelworkers do."
While U.S. steel mills are creations of free enterprise, most overseas mills would not even exist were it not for state subsidies. And in finding that illegally traded foreign steel created the crisis, the U.S. International Trade Commission was unanimous. As for threats from across the pond, the EU will be hammered if it starts a trade war -- for at risk would be the entire $49 billion trade surplus in manufactures the European Union ran with the United States in 2001.
Will U.S. consumers suffer from these tariffs? Writes Visclosky: "Even under a 40 percent tariff, the average cost of a $25,000 car would have risen only about $25; the average cost of a refrigerator just $3."
But if imports were allowed to kill our industry, scores of thousands of steelworkers would have to file for unemployment, as the United States became as dependent on foreign steel as we are on foreign oil.
For Bush, it was a moment of truth. All the big-name economists, editorial writers, corporate lobbyists and think-tank scholars were demanding that he stand by "free trade." But, like a Texas Ranger, the president decided to stand alone, beside the U.S. steelworkers whose numbers were few but whose cause was just.
It was a brave decision, and in taking it the president made a statement the Financial Times did not miss. "Bush's move marks U.S. trade policy turning point," read its warning headline. Indeed, it does. For the president said with his decision that there are U.S. national interests that supersede any and all claims of free trade.
Bush's decision was not in the Wilson-FDR mold, but it was in the tradition of Washington, Hamilton, Madison, Lincoln, McKinley, T.R., Coolidge and Reagan, the last of whom intervened again and again to block flood tides of imported steel, autos, computer chips, machine tools and motor bikes. And if the president's father disapproves of his decision, his grandfather surely would not. For Sen. Prescott Bush stood with Barry Goldwater and Strom Thurmond to oppose the free trade policies of JFK that started the de-industrialization of America.