Tax Man of Steel

Dumping on anti-dumping duties

In October the U.S. International Trade Commission held hearings on whether to revoke anti-dumping duties on steel imports from 16 different countries, including the U.K. and Japan. The duties penalize foreign steel producers for failing to meet profit levels set by the U.S. government.

A bevy of American steel-using companies are hoping the commission will let the duties rust away. Designed to help the domestic steel-making industry, they hurt America's steel-using industries by raising their costs and limiting their supply. As Dan Bridges, head of the Anaheim-based Aggressive Engineering Corp., complained to the Los Angeles Times, "Even if we made ourselves 100 percent more efficient it wouldn't offset the increase in costs we've seen due to the dumping charges."

The domestic steel industry hovers always, in its own poor-mouthing estimations, on the abyss of economic doom. The current fear is that China and India will become steel-making giants, glut the market, and cause a price crash. But currently, especially after the government assumed $9 billion worth of the industry's health care and pension obligations in 2002, steel companies are riding high, with profit rates of 10 percent or more every year since 2004. Dominated by three producers who control 70 percent of the market, the industry enjoys considerable power.

The chances that the International Trade Commission will repeal the duties are slim, if the history and politics of dumping laws are any guide. According to a study by Dan Ikenson of the Cato Institute, if a domestic interest wants the protection that anti-dumping duties provide, the commission will uphold the tax 77 percent of the time.