Thread by @scottlincicome, This new @nberpubs paper is seriously great (and shld be a victory [...]

This new @nberpubs paper is seriously great (and shld be a victory lap for @dikenson, who's been complaining for YEARS abt US trade remedies - especially antidumping duties - on upstream manufacturing inputs like steel).

Quick thread on the findings/implications... /1 https://twitter.com/scottlincicome/status/1290619368070619137

https://twitter.com/scottlincicome/status/1290619368070619137

The USA has (on average) low tariffs BUT we impose a lot - hundreds - of special "trade remedy" duties on imports. As @dikenson has shown, these measures are particularly concentrated in manufacturing inputs - ie, the stuff other US manufacturers need
https://www.cato.org/publications/trade-policy-analysis/economic-selfflagellation-how-us-antidumping-policy-subverts-national-export-initiative /2

Economic Self-Flagellation: How U.S. Antidumping Policy Subverts the National Export Initiative

https://www.cato.org/publications/trade-policy-analysis/economic-selfflagellation-how-us-antidumping-policy-subverts-national-export-initiative

The @nberpubs paper's authors decided to see how these upstream duties affected manufacturing employment in the USA. So they first collected all of the US AD/CVD measures from 1994-2015, and found - you guessed it - the aforementioned concentration (*especially* steel): /3

They next examined the US manufacturing sector, mapping out how upstream & downstream US industries interact with each other. This cool graphic (linking the industries' transactions in 2007) shows the complexity: /4

(As an aside, I cannot tell you how frustrating it is that more policymakers & pundits don't acknowledge or comprehend this situation/complexity, which is absolutely critical for US policy re manufacturing & trade.) /5

Then they calculated the effects of the upstream trade remedy duties (which, they correctly note, are at HIGH rates & can last for a LONG time) on US mfg jobs for the upstream (protected) and downstream industries, finding little benefit for the fmr & big losses for the latter /6

IMPORTANT TO NOTE: jobs in the protected industries actually DECLINED after a year, even though the protectionism remained in place indefinitely. The authors speculate that this may be bc protected firms just banked the extra profits (rents) instead of expanding/investing/etc /7

(which is exactly what other research has shown, eg: https://www.mercatus.org/publications/trade-and-immigration/executive-incentives-import-restrictions-and-competition) /8

Executive Incentives, Import Restrictions, and Competition

Proponents of tariffs and other import restrictions claim that they benefit domestic businesses and workers. In fact, however, they have a more likely—and more unexpected—beneficiary: corporate CEOs.

https://www.mercatus.org/publications/trade-and-immigration/executive-incentives-import-restrictions-and-competition

Finally, the authors examine why downstream industries' jobs suffered from the upstream protectionism, finding the downstream guys raised their own prices (to cover higher costs) and in doing probably lost competitiveness (and jobs) /9

The job-losses were especially severe for US companies whose products were substitutable (ie, US customers cld switch to other, less-costly alternatives). And the pain was "long-lasting."

Here's their overall summary:
/10

So, what can we learn from this?
1) Protectionism is NOT a mfg jobs program & tariffs wouldn't have "saved" US jobs (eg, from the "China Shock"
2) US trade remedies have done long-lasting harm to US *manufacturing* jobs & need to be reformed (cue crickets from Congress) /11

3) Of all the dumb mercantilist policies, upstream protectionism is the dumbest
4) Speaking of, the best/easiest "industrial policy" POTUS cld implement is ending US "natsec" tariffs on steel/aluminum. (Funny how this never gets mentioned by certain industrial policy fans) /12

5) Congress should also look to eliminate unilaterally remaining tariffs on upstream mfg inputs (something other countries, like Canada, did years ago).
6) The US steel industry & its political champions (*ahem*) sure have some 'splaining to do /x

p.s. @CatoInstitute & @dikenson have been killing it on trade remedy reform for decades. Check it out: https://www.cato.org/research/antidumping-cvd-safeguards

Antidumping, CVD, Safeguards

https://www.cato.org/research/antidumping-cvd-safeguards

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