Working Paper: NBER ID: w7640
Authors: Douglas A. Irwin
Abstract: An unresolved question concerning post-Civil War U.S. industrialization is the degree to which import tariffs protected domestic manufacturers from foreign competition. This paper considers the impact of import tariffs on the domestic pig iron industry, the basic building block of the entire iron and steel industry. After reviewing the contentious political debate surrounding the pig iron duties and estimating the elasticity of substitution between domestic and imported pig iron, a standard trade model provides estimates of how tariff reductions would affect domestic prices, production, imports, and welfare. The results suggest that, had the tariff been eliminated in 1869, domestic output would fall by about 15 percent and the import market share would rise from about 7 percent to nearly 30 percent. These relatively modest effects suggest that a substantial portion of the domestic industry could have survived a significant tariff reduction.
Keywords: No keywords provided
JEL Codes: F13; N71
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Removal of tariffs on pig iron (F19) | Decrease in domestic output (F69) |
| Removal of tariffs on pig iron (F19) | Increase in import market share (F10) |
| Elasticity of substitution (D11) | Domestic prices and production response to tariff changes (L11) |