Could the U.S. Iron Industry Have Survived Free Trade after the Civil War?

37 Pages Posted: 16 May 2000 Last revised: 1 Apr 2001

See all articles by Douglas A. Irwin

Douglas A. Irwin

Dartmouth College - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: April 2000

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.

Suggested Citation

Irwin, Douglas A., Could the U.S. Iron Industry Have Survived Free Trade after the Civil War? (April 2000). NBER Working Paper No. w7640. Available at SSRN: https://ssrn.com/abstract=228115

Douglas A. Irwin (Contact Author)

Dartmouth College - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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