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 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) 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 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. 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. 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. 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% Tin mill steel-30% Flat steel products-30% Flat steel products-30% Hot-rolled & cold finished bar-30% Hot-rolled & cold finished bar-30% Car products-13% Car products-13% Stainless rod-15% Stainless rod-15% Stainless steel wire-8% Stainless steel wire-8% Rebar (used in construction)-15% 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. 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. Britain also threatened to impose a tariff on imported citrus from Florida. Brazil, Norway, Japan, and Switzerland were also not happy. (WTO) 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%. 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. Producers were forced to raise prices, due to the new demands for steel. Companies simply can not keep up with the demand 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. 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. 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. 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. 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%. 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. 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 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 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 Questions Comments Comments

13. Conclusion Questions Questions Comments Comments