Case: Standing up for Steel. Mathematics & Economics Case Study

Student’s Name
Professor’s Name
Course
Date
Standing Up For Steel
Answer 1
President George Bush was welcomed in office in 2001 by a trade problem that Bill Clinton’s administration left unaddressed. The United States of America’s (USA’s) domestic steel industry had faced trade issues since 1998 and key stakeholders in the sector felt that it was the right time to solve them. Some of the problems the steel industry encountered included job losses, bankruptcies, falling profits, and depressed steel prices (Rosegrant 1). The unfair pricing of foreign imported steel attributed by the United Steelworkers of America Union, USA steelmakers, and members of Congress was the primary reason for the trade hiccups. As such, the winners of the steel tariffs were the USA’s domestic steelmakers since by imposing trade quotas, these individuals would get a ready market for their products. On the contrary, the losers were foreign countries, the USA’s steel importers, and players of other sectors, such as agriculture, since steel tariffs were likely to incite the USA’s trade partners to retaliate. As a way to reject steel tariffs, foreign steelmakers asserted that the trade issues in the steel industry were caused by the lack of consolidation and the rising domestic competition.
Answer 2
Based on what we have learned in class about the political economy, the government listens to economists to make the right decisions. For example, when imported products affect domestic industries adversely, the government must react by discouraging importation, which can be done by increasing tariffs or imposing quotas. Similarly, since the USA steel industry was suffering due to cheaper imported steel, President Bush ought to have saved local steelmakers. On that note, the USA might have enacted steel tariffs to protect the domestic st...