Local Labor Market Effects of the 2002 Bush Steel Tariffs

President Bush imposed safeguard tariffs on steel in early 2002. Using US input-output tables and a generalized difference-in-difference methodology, we analyze the local labor market employment effects of these tariffs depending on the local labor market’s reliance on steel as an input and as part of local production. The tariffs did not boost local steel employment but substantially depressed local employment in steel-consuming industries for many years after Bush removed the tariffs. The tariffs also led to a persistent exit of steel-intensive manufacturing establishments, suggesting a role for plant-level fixed entry costs in translating the temporary shock into persistent outcomes.