As expected, the World Trade Organisation has ruled that Bush’s tariffs on imported steel violate the WTO rules, and that countries affected can impose retaliatory tariffs.

It’s possible that the Administration will back down, though I can’t see an easy way to do so and save face. And it seems unlikely that the EU, which has already had lots of fun publicising the items on its list, targeted at swing states for 2004 (Harley-Davidsons, Florida orange juice) will refrain from exercising its legal rights. Once that happens, the possibility of a face-saving climbdown will be gone for good, and most of the Republican base will be pushing for another round of (illegal in WTO terms) retaliation. This would undermine the WTO, perhaps fatally.

As I’ve previously mentioned, the WTO made lots of enemies by overreaching itself in the 1990s, on the assumption that big-country governments would always back it up in the end. The wisdom of that assumption is now being tested.