Leibowitz on Trade: Measuring the Steel Industry’s Importance

I’m looking forward to next month’s Tampa Steel Conference, where we will discuss lots of steel-related policy issues. The conference provides an opportunity to weigh the importance of the steel industry in the American economy and the global economy.

We cannot realistically discuss what to do about steel (or any industry) from either a government or a private perspective without gauging the effects of those policy choices on the industry directly affected and the rest of the economy. When it comes to steel policy, the impact of any decision, whether private (to raise prices, for example) or public (to impose or remove import restrictions), will extend far beyond the steel production plants themselves. The effects extend to suppliers of inputs to steel mills (coal, iron ore, alloying elements) and to steelmakers’ customers, such as autos, defense, construction, heavy machinery and capital equipment. One hopes that policy decisions will do more good than harm to the economy. Otherwise, the policy choice is probably not the right one.