Protectionism Made in the USA

America's imposition of tariffs on imported steel has been greeted with a howl of protest around the world. But harsh words have not been followed by a strong counter-attack. Now is the time to confront America's hypocrisy, not to bluster.

The global financial crisis of 1997/1998 - mismanaged by the IMF, largely at the direction of the US Treasury - led to an increased flow of steel imports. But that is part of the market adjustment process the US trumpets so loudly at other times.

The argument put forward by the US, that it was entitled to safeguard against a surge of imports - utilizing safeguard measures that are part of the WTO - is unlikely to past muster with a WTO panel when one is eventually convened, but the argument itself is disingenuous. Europe pushed to restructure its steel industry in the 1980s and early 1990s, and succeeded mostly. In America, many efficient new firms (mini-mills) were indeed created, but yesterday's lumbering giants stood still. They cannot compete with efficient steel mills elsewhere - including (perish the thought) Korea's state-owned steel company.

Many of America's problems are made in the USA. America's deteriorating fiscal position is leading to a strong dollar, just as the deteriorating fiscal position of the US after Reagan's irresponsible tax cut of two decades ago did. While countries may pride themselves on a strong currency, a strong dollar is bad for exports and good for imports.