THE US may be about to drop its tariffs on imported steel to head off a trade war with the European Union.

Such a decision may have a big effect on the future of Corus' Teesside Cast Products division.

The division has been told that semi-finished slab steel will no longer be supplied to other parts of Corus, but instead to the open international market.

Mr Bush's move has been welcomed by unions and politicians on Teesside.

Tony Poynter, chairman of the Teesside multi-union committee, and an executive member of the ISTC union, said: "If these rumours are true, then I will be delighted. I know the World Trade Organisation has already ruled that these tariffs are illegal, and the US must abide by that decision.

"Although the tariffs have not had much impact on the Teesside operations as yet, it is the principle that matters.

"In the future, Corus will be looking to import into North America, so such a decision will have an impact on the company's fortunes.

"I wouldn't be surprised if this decision is as a result of Mr Bush's recent visit to the UK. Mr Blair had promised to raise the issue of the tariffs in his conversations with the president."

A spokeswoman for Corus said: "If and when the tariff is lifted, we will be able to comment more authoritatively, but it is important to remember that Teesside and Corus Construction and Industrial are not affected in any significant way."

A source close to the White House said the decision was likely to be announced later this week, and was "all but set in stone".

Mr Bush has been facing the possibility of £1.4bn of retaliatory tariffs on US products by the European Union, including products such as orange juice from Florida, textiles and machine parts.

Such action has been threatened to start as soon as December 15. Japan has issued a similar threat.

George Bush's aides are believed to have decided that they could not risk sanctions.

But his advisors said they were aware that the reversal could produce a backlash against him in several steel-producing states, including Pennsylvania, West Virginia and Ohio.

Mr Bush decided in March last year to impose tariffs of eight to 30 per cent on most steel imports from Europe, Asia and South America for three years.

But last month, the World Trade Organisation ruled that the tariffs were illegal, clearing the way for retaliatory levies.

President Bush travelled to Pittsburgh and Michigan yesterday to raise funds for his re-election campaign.

He was due to host a fundraising event in Dearborn, Michigan, a suburb of Detroit, where car parts manufacturers said the tariffs have led to a rise in steel prices.