(Not in 2018, but in 2002-03):
Lydia Cox. work documents. “The long-term impact of steel tariffs on U.S. manufacturing [Job Market Paper]”. From the summary:
In this article, I studied the long-term impact of temporary upstream tariffs on downstream industries. When temporary tariffs are imposed on upstream products, even temporary tariffs will have a knock-on effect through the production network, but so far, little is known about the long-term behavior of these spillovers. Using a new method of mapping downstream industries to specific steel inputs, I estimated the impact of the steel tariffs issued by President Bush in 2002 and 2003 on the results of downstream industries. I find that upstream steel tariffs have a highly persistent negative impact on the competitiveness of U.S. downstream industrial exports. The persistence of the export response is driven by the restructuring of global trade flows, which will not be restored once tariffs are removed. I use a dynamic model of trade to show that the existence of the export sunk cost of a specific relationship can produce the order of magnitude of persistence I found in the data. Finally, I show that considering both the same period and continuous downstream effects will significantly change the welfare effects of upstream tariffs.
This is a chart in Figure 7 of Cox, which summarizes the impact on downstream industry exports. The red dotted line is the IRF for industries above the median steel user intensity.
I find this paper very interesting, both in terms of methodology and policy implications, and because I still remember the decision to implement steel tariffs in 2001 (because I was one of the two senior officials) in the CEA’s international economist).
More from Cox (and Russ) Older post Regarding the broader impact of Trump’s tariffs.
