The Steel Crisis: The Economics and Politics of a Declining Industry

warrant presidential inaction. ⁴⁴ The Trade Act's tendency to resolve the contradictory demands of protectionists and free traders by increasing the president's discretionary powers led one steel industry official to observe that "the measure establishes some general principles the industry has favored for a long time, even though it doesn't provide iron-clad guarantees of help." ⁴⁵

The ambiguities and holes in the Trade Act did not immediately appear. A temporary world boom in steel demand temporarily relieved some of the pressures on the domestic industry. Over the long haul, however, the increase in global steel demand only served to exacerbate further steel's plight. Foreign producers invested large sums in modern new plants and equipment, and the prospects of future world steel shortages were gradually replaced by the specter of overproduction. The domestic industry, in the meantime, continued its diversification efforts and slipped further behind many of its foreign competitors. These were crucial years for U.S. steel, and it was within this context that the realities of the Trade Bill revealed itself. Protectionism meant foreign retaliation, but failure to protect the steel industry was political suicide. More than ever before, policymakers now had to find a solution for the deepening crisis in steel. ⁴⁶

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