Steel Productivity has Plummeted Since Trump’s 2018 Tariffs

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. As shown in the graphic above, 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 result is that U.S. steel-using firms, which employ roughly 45 times the number of Americans as steel-producing ones, pay about 75 percent more for steel than do their competitors globally.

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.