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The Effects of 2002 Steel Tariff

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Steel industry was in a tailspin after financial crisis swept ... than 30 U.S. steel firms to file for bankruptcy, and tens of thousands of jobs were lost. ... – PowerPoint PPT presentation

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Title: The Effects of 2002 Steel Tariff


1
The Effects of 2002 Steel Tariff
  • By J.R. Reynolds

2
What is a tariff?
  • A tax levied on a product when it crosses
    national boundaries
  • Specific tariff- a fixed sum of money per
    physical unit of the commodity. (In this case
    steel)

3
Why this tariff was imposed.
  • Steel industry was in a tailspin after financial
    crisis swept through Asia, Latin America, and
    Russia in 1997
  • Effects of Asian currency crisis was from 1997 to
    2001, caused prices for U.S steel to tumble more
    than 30 to a 20 year low.
  • Caused more than 30 U.S. steel firms to file for
    bankruptcy, and tens of thousands of jobs were
    lost.

4
Hypothesis
  • This tariff will actually do more damage than
    good. Could possibly lead to a shortage of steel
    in the U.S, cause smaller manufacturers to fold
    due to increases in price, and possibly ignite
    trade war between U.S. and major trading
    partners.

5
Breakdown
  • Tin mill steel-30
  • Flat steel products-30
  • Hot-rolled cold finished bar-30
  • Car products-13
  • Stainless rod-15
  • Stainless steel wire-8
  • Rebar (used in construction)-15

6
Reactions
  • The European Community, compiled of 15 European
    Nations threatened to impose 300 million in
    duties, ranging from fruit juices to textile
    items in retaliation.
  • Britain also threatened to impose a tariff on
    imported citrus from Florida.
  • Brazil, Norway, Japan, and Switzerland were also
    not happy. (WTO)

7
Problems in the U.S.
  • Pryor to this tariff in 2001, 4 major producers
    were forced to shut down, which accounted for
    about 10.
  • Producers were forced to raise prices, due to the
    new demands for steel.
  • Companies simply can not keep up with the demand
    for steel.
  • Some manufacturers turned to Canadian factories
    for cheaper prices. Canada exempt from tariff
    because of NAFTA.

8
Quality Issues
  • Steel that would not be accepted a year ago is
    now accepted.
  • With limited supplies some have no choice, but to
    work with what they can.

9
  • U.S. producers of stainless steel sheet strip/
    largest producer in the U.S., but not included in
    tariff, were hit with a drop in consumption and
    increase in imports.
  • Consumption of U.S. steel dropped 8, while
    imports increased by 6.
  • Imports now control approximately 20 of
    stainless steel market in the U.S. which is up 3
    percent from 2002.

10
  • Stainless steel rod industry saw imports decrease
    by 34, while the demand for stainless steel rod
    dropped 18.
  • Stainless steel bar market saw imports drop 8,
    while consumption of stainless steel bar
    decreased by 6. Yet imports still control 40
    of the market down one percent from the previous
    year

11
Conclusion
  • Questions
  • Comments

12
(No Transcript)
13
Conclusion
  • Questions
  • Comments
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