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235. Memorandum From the Special Representative for Economic Summits (Owen) to President Carter 1

SUBJECT

  • Tony Solomon’s View on Steel TPM (U)

I called Tony Solomon, who is vacationing on the West Coast, to ask his views on the steel TPM. Here are my notes as to what he said:

—As the guy who put all this together and who negotiated with them (the steel people) for two years, it makes no sense not to suspend TPM. (C)

—The combination of TPM and the US Steel suits would have a significant inflationary impact. He has talked to 30–40 people on the West Coast, all of whom agree that the only issue on which you are vulnerable is inflation. Maintaining TPM in the face of the US Steel suits would make it look as though the Administration were fueling inflation. This should be the dominant consideration in your decision. You would receive strong consumer criticism if you did not suspend. (C)

—The US Government would be in a stronger position to negotiate with the steel firms if we had suspended TPM and thus demonstrated our toughness. Suspension of TPM would put more pressure on Roderick,2 since the rest of the industry will want to see it restored. If we don’t suspend, we will look like a paper tiger, and US Steel’s terms will be that much stiffer as a result. (C)

—The Europeans are anxious to keep TPM, in large part, in order to firm up prices in the European market. TPM suspension will not produce a much worse European reaction than the suits themselves. (C)

—Your credibility is at stake and your image would be damaged by a reversal of our past position. The head of the National Steel Company had approached Tony two months ago to propose a deal under which US Steel would only file two suits and we would maintain the TPM. Tony replied that this didn’t make sense, since Roderick could still keep the four other country suits dangling over our head, and we would encounter vigorous criticism from the US public. The head of National Steel replied: “You are right; we can’t fool you, but maybe we can fool the White House.” (C)

  1. Source: Carter Library, National Security Affairs, Brzezinski Material, Brzezinski Office File, Subject Chron File, Box 90, Economics/International: 1–5/80. Confidential. Sent for information. Carter wrote at the top of the page: “cc Lloyd—info. C.”
  2. David Roderick was Chairman of U.S. Steel.