GWENT'S battered steel industry may yet suffer more bruising if the US decides tomorrow to erect barriers against imports in order to protect its own producers.

President Bush may well announce 40% tariffs on the import of steel products, effectively shoring up America's steel industry, which is in a sickly state.

The effect will be to divert steel intended for the American market to Europe, causing a huge surplus, with exporters to the Continent fighting for limited business among themselves.

Corus makes 80% of its sales in Europe, so it and companies like it will have to compete further - or else.

There may yet be hope. Both America and the rest of the steel-producing countries acknowledge that they are flooding the globe with too much steel.

Europe, including Corus, has attempted to put its house in order by cutting jobs, nowhere more uncompromisingly than in Gwent and the rest of Wales. In America, more than 20 steel mills have filed for bankruptcy since Mr Bush took office in 2000.

The big companies are calling for the 40% tariff and reminding Mr Bush that they need the help of his administration to pay for health and pension benefits for retired steelworkers.

Last June, Mr Bush linked his threat of so-called steel 'safeguard' action with a call for the elimination of subsidies and restructuring of the uncompetitive world steel capacity. Corus has joined with the European Commission in condemning the use of tariffs but support this call for a more open world market.

Last year, Corus as a group exported less than 5% of its production to the USA and the impact on direct strip exports there from Welsh mills such as Llanwern is small. But Corus is seriously worried about the probable consequence of US protectionism - the diverting of steel away from the US to Europe.

The reason given for last year's Corus cutbacks was exchange rates and the difficulty of selling steel in Europe in those conditions because of the high value of the pound. If Corus and other producers fall victim to the violently aggressive marketing of steel in Europe that would inevitably follow the erection of US trade barriers, it would presumably be in the same sort of financial mire.

It is understood that its objective is to persuade the US that rather than introducing incompatible protective measures it should play a full part in the search for a co-op- erative, mutually-agreed solution that reduces uneconomic steel capacity irrespective of its geographical location.

However, if President Bush does go ahead with crippling tariffs, Corus would probably be asking the UK government to insist that the European Union introduces similar measures as a matter of urgency in order to protect the EU's domestic producers - in other words, Mr Bush's announcement would be a declaration of trade war.

It is too early to say whether Corus's slimmed-down workforce in Wales will have to undergo more pruning, but no-one is giving watertight assurances about the future. One solution is for the US to embark on the same sort of 'restructuring' as European manufacturers have gone through during the past decade or so and culminating in last year's job-slashing exercise.

But this is not just about economics - it's also about American domestic politics and promises made to hard-pressed American steelworkers by Republicans, who alleged that Bill Clinton had forgotten them.

It is believed that even as late as last weekend, Bush and his advisers were doing their sums and trying to discover what the political fall-out would be from refusing to give in to the clamour from US steel companies.

The fall-out in Britain and Europe if he decides to go ahead with the full 40% could be disastrous, as new steel-producers in the Far East, China, Russia, India and South America intensify the competition for customers in Europe.