It would also be reasonable to question the effect that the March 2002 steel tariffs had on U.S. steel-consuming industries given that the U.S. economy experienced a recession during the first three quarters of 2001 and the subsequent "jobless recovery." This is certainly a valid point, and one could also point to the closing of LTV Steel and the other duties imposed at the end of 2001 as the true causes of the U.S. steel-consuming industries' hardships. While these factors undoubtedly caused supply shortages and price increases for steel prior to the March 2002 steel tariffs, there are several facts that clearly indicate that the recent tariffs had a significant impact on the U.S. economy. First, International Steel Group purchased LTV Steel and other troubled U.S. steel companies and began restoring significant U.S. steel production capacity by May 2002 (Francois and Baughman, 2003), thus the effect of LTV's closing would have been temporary.
Second, the existing steel shortages (and resulting price increases) caused by the anti-dumping duties and the loss of LTV's production were exacerbated when U.S. importers ceased their ordering steel in January 2002, awaiting President Bush's decision on the tariffs (Francois and Baughman, 2003). The supply of steel within the U.S. was so low that by May 2002, the domestic U.S. steel producers were supplying in excess of 90% of the market, compared with the usual 80-85% (Francois and Baughman, 2003). Lastly, the U.S. Bureau of Labor and Statistics reported that total employment in U.S. the steel consuming industry declined by approximately 915,000 between 2000 and 2002. Using December 2001 steel prices as the benchmark, Francois and Baughman (2003) determined that by December 2002, about 200,000 jobs were lost in the U.S. steel consuming sectors as a result of the higher steel prices. Although other factors certainly contributed to the difficulties experienced by U.S. steel consumers, it is clear that the steel tariffs imposed in March 2002 had a significant impact on the U.S. economy.
