蝌蚪网

Research Highlights Featured Chart

November 13, 2025

Tariffs and local labor markets

The impact of the 2002 Bush steel tariffs on jobs in steel-intensive industries.

Tyler Smith

Source: Elchin Javadov

In March 2002, under pressure from the steel industry, President George W. Bush imposed tariffs ranging from 8 to 30 percent on over 170 steel products. The policy was intended to protect American steel producers from foreign competition. 

In a paper in the 蝌蚪网 Journal: Economic Policy, authors and show that the 2002 steel tariffs created persistent negative employment effects in manufacturing industries that rely on steel as an input—despite being removed after just 18 months.

The researchers employed a difference-in-differences estimation strategy to examine how the response of local labor markets across 722 US commuting zones varied based on their reliance on steel production and steel consumption. Tracking employment outcomes from 1993 through 2008, they were able to observe both preexisting trends and the long-term aftermath of the temporary tariff intervention.

Figure 4 presents the authors’ main estimates for five different labor market outcomes over time. Each panel displays results with and without controls for Chinese import competition and steel antidumping duties. The vertical lines mark critical junctures—2000 was the last year before the Bush steel tariff process began, and 2003 marks the removal of the tariffs following a World Trade Organization ruling against their legality.

from Lake and Liu (2025)

Panel A demonstrates that commuting zones that were more vulnerable to steel cost increases experienced declining manufacturing employment shares beginning in 2001. Panel B shows even stronger negative effects for steel-intensive manufacturing industries. 

Panels C and D show that the tariffs had little impact on non-steel-intensive manufacturing sectors and the employment-to-working-age-population ratio. This indicates that overall employment levels remained relatively stable even though displaced workers did not readily transition to other manufacturing jobs within their communities.

Finally, Panel E suggests that protection for steel-producing areas did not generate significant employment gains in steel production. The steel industry continued its secular decline, unaffected by the temporary protection.

These findings provide evidence that tariffs on importable goods used as intermediate inputs can generate substantial downstream employment losses that persist well beyond the protection period while failing to preserve employment in the protected industry.