Case Hardened

A break on specialty steels

Specialty steels account for only 10% of American steel sales, but they are nonetheless the glamorous high-tech end of the business, the items that can produce big profits. Stainless steel, used for knives, forks and hundreds of other products, is one such metal. Jet-engine fan blades, nuclear-reactor control rods and orthopedic body implants are made of others. But just as the older American carbon-steel industry is being clobbered by competition from abroad, so too are specialty steels. As Wall Street Analyst Peter Anker put it, "No other country would permit the kind of intrusion in their industry that we have permitted. We let [foreign exporters] run all over us." Last week the Reagan Administration, reacting to intense industry and union pressure, approved some protection for the U.S. specialty-steel industry by imposing higher tariffs and some quotas against imports.

The President raised tariffs from 10% to 20% on some specialty steels, an action which is likely to increase the cost of those imports in the U.S. and make American goods more competitive. In addition, he lowered quotas for steel-bar imports from 40,053 tons to 27,000 tons for the first year of the limit. Other, less severe quotas were imposed for rod and tool steel.

No one seemed completely happy with the decision. Lloyd McBride, president of the United Steelworkers of America, complained that the President should have used lower quotas rather than higher tariffs to block imports. Said he: "Where tariffs are substituted for quotas, it never works." Adolph Lena, chairman of Al Tech Specialty Steel Co. in Dunkirk, N.Y., and an industry spokesman, called the measures "wholly inadequate."

The Europeans felt betrayed. They shipped 92,000 tons of specialty steels to the U.S. in 1982, and are chiefly blamed for the American industry's woes. British Prime Minister Margaret Thatcher blasted the White House action before the House of Commons. Said she: "It is a deplorable action on the part of the United States." The Commission of the European Community expressed its "profound dissatisfaction."

After the Reagan Administration's many pious pronouncements against protectionism and the agreement to foster free trade at the Williamsburg economic summit in May, the White House had a hard time defending the tariffs. They were, said U.S. Trade Representative William Brock, a "two by four" to swing against unfair subsidies and "a world system that is totally trade distortive, where governments intervene at will without any consideration of international rule." To many outsiders, though, the White House action looked like a cave-in to domestic pressures without consideration of the long-term consequences for international trade. This file is automatically generated by a robot program, so viewer discretion is required.