WASHINGTON -- President Bush yesterday lifted the tariffs he imposed on imported steel 21 months ago, averting a trade war with Europe and Japan but igniting what could be a political firestorm in steel-producing states.

	Online Graphic: Temporary Tariffs See an explanation of the tariffs the U.S. had imposed on imported steel. Related articles Immediate impact to steel industry expected to be slight Economy, not steel, key issue Text of Bush's statement

The European Union -- which had threatened to retaliate with $2.24 billion worth of its own tariffs against U.S. goods and services starting this month -- said almost immediately after Bush's announcement that it would drop those plans.

The trade commissioner for the 15-nation EU, Pascal Lamy, announced that he was "pleased that after nearly two years of litigation, the [United States] has decided to abide by their [its] international obligations by lifting the illegal safeguards."

The World Trade Organization ruled Nov. 10 that the steel tariffs, which ranged from 8 percent to 30 percent on 10 products, were illegal under international trade law, even though the U.S. International Trade Commission had said in 2001 that imported steel was badly injuring the domestic steel industry.

The tariffs were scheduled to stay in place three years.

Leo Gerard, president of the United Steelworkers of America, blasted the EU as hypocritical and said Bush had been blackmailed. "We don't believe the safeguard action was illegal," Gerard told reporters. "This was a terrible precedent that was set today."

In announcing the end of the tariffs, the White House maintained that the steel industry was in much better condition now than in early 2002 and that the tariffs had succeeded.

U.S. Trade Representative Robert Zoellick told reporters at the White House that the economy has improved, the steel industry has consolidated and strengthened itself during and that the protections were no longer needed.

As a sweetener, the White House said it was proposing to beef up the current system of licensing and monitoring imports, so that the government would know if a sudden influx of imported steel was threatening to destabilize the domestic industry.

Zoellick said he could not confirm, as domestic foes of the tariffs have lately insisted, that the protections had cost 200,000 jobs in steel-consuming industries in order to save 150,000 steel production jobs. There have been other factors at play, he said.

Still, Gerard ridiculed as "the big lie" the contention that more jobs have been lost because of higher steel prices in consumer goods than were saved among steel producers.

A new review of the tariffs by the U.S. International Trade Commission said it found a cost to the U.S. economy of $30 million because of the impact of the tariffs on steel consumers. It did not, however, calculate job-loss figures.

Republican lawmakers from steel-producing states who had strongly lobbied Bush not to lift the tariffs reacted almost uniformly, saying they were disappointed by yesterday's action but were grateful to Bush for taking action 21 months ago.

Sen. Rick Santorum, R-Pa., the Senate's No. 3 GOP leader, has conceded all along that most senators opposed the tariffs as a violation of the administration's free trade efforts.

"Obviously, I'm disappointed that the president did not continue the steel tariffs," Santorum said yesterday, "but I'm still very appreciative that the president did something that no other president in history has done; his imposition of steel tariffs helped save America's steel industry."

Republicans have been wary of speculating about the political ramifications of the president's decision. While it could make it more difficult for Bush to win in Pennsylvania, West Virginia and Ohio, it may help him in states such as Florida that would have been hurt by retaliatory tariffs.

Rep. Ted Strickland, D-Ohio, said the decision was a breach of presidential trust. "The president gave his word we would have three years of relief from illegal imports," Strickland said. "But in the face of pressure from the WTO and the European Union, he walked away from that pledge."

The White House made the tariff announcement through press secretary Scott McClellan, who read a statement from Bush. Zoellick and Commerce Secretary Don Evans, answering questions from reporters, both insisted that the prospect of a trade war with Europe and Japan was not a factor in the president's decision.

The threat of European retaliation "was no factor at all; it was not even a consideration," Evans maintained. "The only consideration was the changed economic circumstances in the [steel] industry itself, as well as in the domestic and global economies."

Zoellick added with a wry smile, "We're very delighted there was no retaliation."

The USW's Gerard said his next move would be to ask Congress for help with retired steel workers' health benefits. At one point, Congress had been on the verge of granting such aid but was persuaded by the administration that the tariffs would solve the problem by directing some collections to a trust fund.

Zoellick said pensions of eligible retired steelworkers are now guaranteed through the Pension Benefit Guaranty Commission, and that was a boon to many retired workers. The PBGC was set up to "protect the retirement incomes of about 44 million American workers in about 32,500 private defined-benefit pension plans." But union leaders say it was far from adequate and does nothing for health care.

Gerard's union, representing 1.4 million active and retired workers, has endorsed Gephardt for president. The real issue in lifting the tariffs, Gerard said, is the signal to Europe and other countries, such as China, that "America's heartland industries" can be the next targets.

"This isn't just about one industry," he said. "This is about the survival of industrial America."