Surges, steel, and safeguards: Essays on international trade

This dissertation consists of three essays on international trade. The first essay shows how demand shocks can cause import surges in a model with sunk entry costs and credit constraints. Out of the possible temporary trade policies to ease the adjustment to increased competition from imports, safeguards (temporary tariffs on all imports in that industry are least distortionary. The second essay documents that import surges do follow demand surges in the U.S. steel industry. The relatively high volatility of steel demand and imports, coupled with the high costs to adjustment in the industry, could provide a partial explanation as to why many safeguards cases involve steel. The third essay evaluates how helpful safeguards can be in maintaining cooperation to extend trade liberalization over time. Even though temporary tariffs lower the gains from trade, they can offer an alternative to no cooperation when political pressures are particularly high. And as heavy users of tariffs seem to compensate their partners by better concessions in later negotiations, they can even increase the pace of liberalization.