Bush 'to axe' tariffs on imported steel

GEORGE Bush is ready to drop the swingeing duties he imposed on steel imported into America to avert a damaging trade war with Europe.

The President is this week expected to cancel, or at least reduce, the 30% tariffs to protect his chances of re-election next year.

Bush imposed the levies on British and European steel in March 2002 to protect the hugely inefficient US mills from cheaper foreign competition.

But the move was ruled illegal by the World Trade Organisation, and the European Union threatened sanctions against US products from electorally sensitive areas - such as Florida's citrus fruit farmers.

The showdown threatened to escalate into a trade war, with Brussels warning it would hit back with duties totalling £ 1.5bn by December 15 unless the US rethought its steel strategy.

Cynics saw the steel duties as an electoral tool to win votes in steel-producing states such as Pennsylvania, where Bush was yesterday holding a fund-raising event.

But the tariffs have failed to lift the fortunes of steelmaking areas, with carmakers complaining that the duties have increased the price of raw materials, forcing them to lay off workers.

The Washington Post said Bush had decided to repeal the duties 16 months ahead of schedule 'because of the threat to his re-election prospects'. Officially the White House would only say: 'The matter is still under review.'

Bush's aides fear the move could trigger a political backlash in next year's presidential election in the pivotal steel-producing states of Ohio, Pennsylvania and West Virginia.

But they have decided they cannot risk the EU carrying out its threat to impose sanctions on citrus fruits, farm machinery, textiles and other imports from the US.