Trade Protection Along Supply Chains

Abstract

During the last decades, the United States has applied increasingly high trade protection against China. We combine detailed information on US antidumping (AD) duties-the most widely used trade barrier -with US input-output data to study the effects of trade protection along supply chains. To deal with endogeneity concerns, we propose a new instrument for AD protection, which combines exogenous variation in the political importance of industries with their historical experience in AD proceedings. We find that tariffs have large negative effects on downstream industries, decreasing employment, wages, sales, and investment. Our baseline estimates for 1988-2016 indicate that, due to AD protection against China, around 1.8 million US jobs were lost in downstream industries, with no significant job gains in protected sectors. When we extend the analysis to measures introduced under President Trump, we find that around 500,000 jobs were lost during the first two years of his term. We also provide evidence of the mechanisms behind the negative effects of protection along supply chains: AD duties decrease imports and raise production costs for downstream industries.

Trade and Inequality in Europe and the Us

“…Different from anti-subsidy or anti-dumping measures, safeguards do not require unfair trade practices of the exporting countries.69 Jabbour et al (2019) andBown et al (2020) show that the more widely used anti-dumping tariffs, which are justified by other countries' unfair pricing practices, had no positive aggregate effects on employment in France and the US, respectively. Such tariffs did little to shore up domestic employment in protected industries, but were associated with job losses and lower wages in downstream customer industries.70 The MFA, which was originally instituted in 1974, was gradually phased out from 1995 to 2005.…”

The Employment Consequences of Anti-Dumping Tariffs: Lessons from Brazil

“…Prusa (1997), Bown and Crowley (2006), Bown and Crowley (2007), Baylis and Perloff (2010), and find that AD tariffs increase imports from non-targeted countries, while Konings et al (2001) and Durling and Prusa (2006) do not find a significant third-country effect. This literature has also found that AD tariffs affect firm performance in the protected sector (Konings and Vandenbussche 2008, Pierce 2011, and Jabbour et al 2019, as well as employment (Trimarchi 2020, Cacciatore 2020, andBown et al 2021).…”

“…Gallaway et al (1999) also evaluates the welfare loss from AD tariffs with a computable general equilibrium model. 8 Flaaen and Pierce (2019) and Trimarchi (2020) find that 2018-19 U.S. tariffs weakly increase employment in the protected sectors, but Barattieri and Cacciatore (2020) and Bown et al (2021) find that anti-dumping tariffs have insignificant employment effect on the protected sectors. Flaaen and Pierce (2019), Barattieri and Cacciatore (2020), and Bown et al (2021) find significant declines in employment in the downstream sectors.…”

Local Labor Market Effects of the 2002 Bush Steel Tariffs

“…Two recent papers have also focused on the adverse employment effects of tariffs but through temporary trade barriers on intermediate inputs. Bown et al (2021) find that US anti-dumping (AD) duties against China over the 1998-2016 period cost nearly 2 million jobs in downstream industries. Barattieri and Cacciatore (2020) find that employment in downstream industries falls by 0.5% points following a 1% point increase in the share of imports subject to AD and countervailing (CV) duties in upstream industries.…”