Steel Productivity has Plummeted Since Trump’s 2018 Tariffs

SEATTLE (Scrap Monster): Studies, such as those by Klein and Meissner (2025) and Furceri et al (2019), have shown that import tariffs tend to depress labor productivity in protected industries. The logic is threefold. First, by shielding domestic industries from foreign competition, protectionism allows less productive firms to populate the market. Second, by reducing import competition, protectionism removes incentives for domestic firms to invest in efficiency improvements. Third, by hindering companies from collaboration and knowledge-sharing with foreign ones, protectionism lessens opportunities for technological advance.

We decided to test these findings by looking at labor productivity in the U.S. steel industry since President Trump imposed 25 percent tariffs on steel imports in March 2018. The results are striking. The output per hour in the U.S. steel industry has fallen by 32 percent since 2017. For the economy as a whole, output per hour has increased by 15 percent.

The conclusion is clear. Steel tariffs are a bad deal for U.S. manufacturers, a bad deal for U.S. workers, and a bad deal for U.S. consumers.

Courtesy: www.cfr.org