The Production Effects of Protectionist Announcements: An Examination of the Steel Industry

The well-being of the American steel industry is vital to the overall health of the United States (U.S.) economy. This belief is, in part, the impetus for the enactment of protective tariffs and quotas. This paper examines the impact of the announcement of the 2001 tariffs. Numerous forces have buffeted the U.S. steel industry over the last decade. Domestic steel firms operate in a highly global, fiercely competitive, and capital-intensive industry. This environment has proven inhospitable to the U.S. steel industry, widely criticized for inefficiency and overcapacity. A regression analysis finds that the announcement of the 2001 tariffs had no statistically significant impact on U.S. domestic raw steel production. Supporting theories are reexamined, and the implications of this finding for trade policy are explored