Steeling For a Fight

First, George W. Bush twitted Europeans' environmental correctness by deciding to let the United States sit out the Kyoto treaty on global warming. Then he offended their sophisticated moral sensibilities with his plainspoken bluster about "the axis of evil." But last week, U.S. unilateralism struck an especially sensitive part of Europeans' anatomy: their pocket books. In a decision that seems directly to contradict the free-market gospel that is America's chief political export, Bush imposed protectionist tariffs of 8% to 30% on foreign steel.

That's lower than the up to 40% penalties Big Steel said it needed to survive a deluge of cheap overseas metal, but more than enough to provoke the outrage of Europeans, who fear that their manufacturers and workers have the most to lose as the world's second-largest net importer of steel, after China, starts turning ships away. (About 28%, by value, of steel imported by the U.S. in 2001 came from the E.U.; Japan, Korea and Russia were also hit by the tariffs.) Even British Prime Minister Tony Blair, who never met an American President he didn't like, howled at the "unacceptable and wrong" measures. European Union trade Commissioner Pascal Lamy resorted, as Europeans so often do when the Americans baffle them, to cowboy clichés. "The world steel market is not the Wild West where everyone can do as he pleases," he said. "There are rules."

Lamy and the E.U.'s member governments have every intention of seeing to it that those rules (or, at least, Europe's interpretation of them) are enforced. The E.U. is building a case to challenge the U.S. tariffs at the World Trade Organization, a process that could take nearly two years. In the meantime, Europe's biggest problem isn't really the business it stands to lose in America — Germany's ThyssenKrupp Steel, for example, says the tariffs will directly affect products that accounted for just 2% of its ?12.6 billion revenues last year — but the 2 million to 5 million tons of mostly low-priced steel, particularly from Asia, that could be redirected from the U.S. to Europe. Invoking the same wto safeguard provisions that the U.S. used to justify tariffs, the E.U. could soon seal off its own steel market. Some European politicians even argue that wto rules will allow for sanctions against other U.S. products, though Lamy says he takes a dim view of a "you kick me, I punch you" response.

It may not come to an all-out trade war, but the brief era of post-Sept. 11 togetherness is now officially over. The Americans are serene about this. "The Europeans will scream," a Bush administration official told TIME last week. "But coming from them, it's a little hard to take." As U.S. Trade Representative Robert Zoellick, heretofore regarded as one of the Bush team's great internationalists, pointed out, the Europeans subsidized their steel industry to the tune of $50 billion over the past 30 years.