However the Supreme Court decides, history suggests the levies will induce lasting structural shifts, similar to a targeted steel regime that was briefly deployed more than 20 years ago.
George W. Bush's presidency is remembered for a wide variety of reasons. Among the lesser of these is its brief attempt, initiated in 2002, to tame a global trade imbalance in the steel industry with what were then fairly punitive tariffs.
They were tame by comparison to many of those imposed - often haphazardly - by Donald Trump and his administration throughout this year. But notable as an object case.
Unlike the Liberation Day tariffs and waves of revisions to follow, the Bush package is now more than two decades old, and was passed with intentional parameters, strategy, and uncontested legality. All of which has provided a strong foundation for trade economists to look closely at, and understand how tariff impacts unfold. And last.
Indeed a growing body of research demonstrates that even brief and focused tariffs can have lasting consequences on domestic industries, investment, and global trade relationships.
The March 2002 tariffs of 8–30% on imported steel lasted just over a year before being rescinded under pressure from the World Trade Organization and U.S. trading partners. Though even that was enough.
A landmark 2016 study from economists Autor, Dorn, Hanson, and Song found that the protection period caused profound shifts in the market. This and other research have observed how prices for domestically produced steel rose significantly, and domestic producers were able to invest in some capacity expansion and plant upgrades. At the same time, some foreign suppliers reduced exports or exited the U.S. market entirely, creating a permanent change in market share distribution.
These dynamics illustrate a concept known as hysteresis, in which temporary shocks (often driven by policy) leave enduring structural effects.
The long-term consequences of temporary tariffs operate through several mechanisms. Firms invest in equipment, expand production, and hire more workers, changes that persist beyond the policy window. Tariffs alter competitive dynamics by inducing market entry and exit effects. Inefficient domestic producers survive longer than they would under free trade, while foreign competitors reduce participation.
More importantly: supply chains are reconfigured, as firms adjust sourcing to mitigate tariff risks, often in ways that are costly to reverse. And temporary tariffs can provoke retaliation by trading partners, which affects downstream industries acutely.
The Autor et al study found U.S. steel prices increased by 8–12% during the tariff period. Domestic production rose modestly, while employment in the steel sector experienced a temporary boost. But the permanent effects were far more pronounced in sectors downstream from steel, such as automotive manufacturing.
While these sectors initially faced higher input costs, firms adjusted production strategies, sourcing, or pricing in ways that cemented long-term changes in supply chains and competitive behavior. The tariffs themselves were temporary. Their impact on the structure of the U.S. steel market and related industries still persists, the study found.
2026 could well see the same, albeit across a far wider slate of industries, even if the tariffs are shelved in whole or part by a Court ruling.
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