DP6486 Did US Safeguards Affect Mark-ups of EU Steel Producers?

Author(s): Hylke Vandenbussche, Ziga Zarnic
Publication Date: September 2007
Keyword(s): firm data, price-cost margins, safeguard measures, steel industry, trade diversion
JEL(s): F13, L13, L61
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=6486

This paper empirically investigates the effects of the US safeguard protection on steel imports in 2002 on the mark-ups of EU steel producers. We identify a large panel of EU steel producers between 1995 and 2005 affected by the safeguards. Using the Roeger methodology, our results show that the protection signifcantly reduced the EU firms' mark-ups. Single-product firms suffered relatively more from the safeguards than multi-product firms. Our evidence further suggests that the US protection resulted in some diverting of the EU steel especially towards China, aggravating the situation on the Chinese steel market and ultimately resulting in the Chinese trade protection of steel imports.