A number of industry-watchers agree. They argue that, in the long run, tariffs only protect uncompetitive companies. And protecting uncompetitive companies only delays the industry shake-out that seems crucial if U.S. steel-makers are to once again compete against the likes of Posco, South Korea's state-run steel giant.

Moreover, critics of U.S. steel producers insist tariffs won't cure the real problem plaguing those companies: an inefficient, highly unionized workforce that keeps the cost of production high.

"The tariffs are about protecting jobs and ridiculous benefit levels," asserts Klein. "They are just delaying the inevitable."

To be sure, workers at traditional integrated steel production companies (companies that produce steel from scratch, not scrap metal) have used a strong collective bargaining position to secure high wages and lavish benefits. In 2001, for example, Bethlehem Steel's total cash costs for health care and other insurance amounted to $300 million.

In contrast, minimill producers like Nucor and Steel Dynamics (which create new steel from scrap metal in electric arc furnaces) enjoy huge cost advantages over the integrated mills. They produce a ton of steel with one-seventh the worker-hours. Most employ non-union workers, and therefore are not burdened with high payrolls or legacy benefit costs.

Millstone Down at the Mill
Indeed, CFOs at integrated manufacturers have been hard pressed to figure out how to pay for the benefits of retired employees, let alone the benefits of current employees. At one point, steel-industry executives and union leaders pleaded with the Bush administration to pick up billions in health-care costs and other benefits for 600,000 retired steelworkers and their families.

But Pres. Bush passed on picking up that tab. In fact, after the President rejected so-called "legacy-cost relief," Bethlehem Steel announced it was halting merger discussions with U.S. Steel.

"Even though we have downsized our capacity and modernized facilities, these legacy obligations constitute an extraordinary burden," Robert Miller, CEO of Bethlehem Steel, said recently. Those costs, Miller noted, "have a major impact on the ability of integrated producers to compete and to survive."

Nevertheless, CFOs at some of Bethlehem's domestic rivals believe the 30 percent tariff on imported steel buys them time to get their houses in order. "We believe the 201 tariffs create a breathing space for the industry to be restructured," asserts Surma.

But even the U.S. Steel CFO knows the clock is running out on American steel-makers "We all know that time is short," Surma grants. "If all we do is maintain the status quo, the outcome will be worse the next time around."

Given the current state of the U.S. steel industry, "worse" is hard to envision.

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