The long‐term impact of trade protection

Benjamin Liebman and Kasaundra Tomlin

The World Economy, 2023, vol. 46, issue 3, 532-559

Abstract: A sunset review policy requires that antidumping orders be removed after 5 years unless petitioners could prove that removing protection would likely lead to the resumption of dumping. Initial sunset victories are greeted favourably by the shareholders of petitioning firms, while subsequent five‐year reviews are viewed less optimistically. Securing long‐run protection through affirmative sunset reviews appears to increase CEO compensation. Overall, we find no evidence that obtaining long‐run protection actually reduces the likelihood of exit; however, steel firms that secured trade protection for 10 years+ actually observed a higher probability of exiting, indicating that long‐run trade protection failed to save these firms. Finally, we find that more innovative firms tend to survive at a higher rate with long‐run trade protection.

Date: 2023
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