10/15/2004

Steel tarrif lifted

In an effort to give the steel industry a chance to consolidate and modernize, President Bush had impose a tariff on imported steel. The President recently announced that the tariff will be lifted. This decision resulted in a negative response from the steel industry who claims that they need protection from unfair foreign competition.

My question is: What about competitive advantage? In Principles we learned that everyone benefits when we each produce what we're good at. We would all get more of everything. High steel prices are reflected in the price of many consumer goods: cars, buildings, etc... Electrolux vacuums has even announced a change in this year's projections because of rising steel prices. Something as small as a screw at the hardware store will go up.

If the price of consumer goods is held at a lower level, doesn't everyone benefit?

4 comments:

John West said...

Comparative advantage seems to be a favorite subject on this classes blog. It is true that it does work out better for society, when companies and or countries produce something in which they hold a competitive edge. I think that it will actually be beneficial to the U.S. steel industry in the long-run, now that Bush has repealled the tariffs. They will have to trim the fat and compete with European firms that currently are just running more efficient steel businesses.

Bryce Larkin said...

This is one of the changes that I was not happy with Bush. If people can make steel faster and cheaper over seas, then they should be able to. If they have a comparative advantage in steel, it will benefit everyone. Yes, steel workers will be out of a job. The workers will have to find different jobs that the United States has a comparative advantage in. This in time will be the best thing for the US.

Maudi said...

I agree that if something is made better, faster, and cheaper over in another country then why not let it be done there and have it sent here. If there is something that we seem to make better, faster and cheaper then we should make it and send it there. It only makes sense to things this way. The only problem is that we might putting someone with a lot of skill in certain area out of a job because we can't seem to do the job better then someone else.

Dr. Tufte said...

Comparative advantage - not competitive advantage ...

Bush's steel tariff is widely perceived as one of his dumbest, and most shamelessly politically motivated policies. They did this to ensure that West Virginia stayed a red state, and now that this seems assured they are repealing it.