If you try hard enough. Sand paper will cut and damage steel bushings. Depending on the type of sandpaper it may be coated with garnet, carbide or any number of other compounds that will eat away at steel.
A more solid piece of carbide will, especially with repeated or prolonged contact. Carbide is used to machine some metals in a lathe.
Lower quality busing will get eat up more quickly all of it than better quality ones. Softer metals followed by plated metals would be more susceptible to fast wear than high speed steels or stainless. But, all bushings should be considered consumables and replaced when they get out of tolerance for your needs.
That is why I only use bushing time get close to size quickly and finish the piece based on measurements from the individual pieces in the hardware kit to be installed.