Menzie Chinn, 08 October 2018

Costas Arkolakis, Natalia Ramondo, Andres Rodríguez-Clare, Stephen Yeaple, 08 October 2018

One consequence of the last decades of globalisation is that, thanks to multinational firms, goods are increasingly being produced far from where ideas are created. Using general equilibrium modelling, this column analyses the welfare and distributional effects of the recent wave of protectionism. Central to the results is the flexibility that multinational firms have in locating their innovation and production activities around the globe.

Banri Ito, 01 September 2018

With protectionism on the rise around the world, the question of why politicians often call for protectionist trade policies in their election campiagnsis becoming more important than ever. This column introduces empirical evidence from Japan to show that politicians from constituencies facing a substantial increase in imports, and therefore stronger electoral pressure, are more likely to advocate protectionist trade policies.

Alessandro Barattieri, Matteo Cacciatore, Fabio Ghironi, 10 August 2018

Populist politicians argue that protectionism stimulates the domestic economy. This column uses data on temporary trade barriers from antidumping investigations to show that when small open economies have imposed protectionist measures, it has caused inflation to rise and real economic activity to fall. Empirical analysis and model-based exercises show that protectionism is costly even when used temporarily, even for economies stuck in liquidity traps, and regardless of the flexibility of the exchange rate.

Ufuk Akcigit, Sina T. Ates, Giammario Impullitti, 02 July 2018

The optimal set of industrial policies to tackle increased competition from global technological rivals is once again the centre of a heated debate, with protectionist policies now gaining traction. Drawing on US experience three decades ago, this column examines the effects of import tariffs and R&D subsidies on domestic firms’ global competitiveness, aggregate growth, and welfare. It argues that import tariffs generate large dynamic productivity losses and may enhance welfare only for a short time horizon and when trading partners do not retaliate. By contrast, R&D subsidies stimulate domestic innovation and increase welfare, especially over longer time horizons, without jeopardising the gains from trade. 

Jeffrey Frankel, 27 June 2018

Saileshsingh Gunessee, Chris Milner, Zhaohui Niu, 19 June 2018

Trade liberalisation is expected to have ushered in an era of increased globalisation. This column uses a measure of overall trade protection comprising tariff-equivalent non-tariff measures and tariffs to examine whether protectionism has fallen or increased over the past two decades. The results suggest that overall protection levels have not decreased despite tariff liberalisation, as non-tariff measures have proliferated both across sectors and countries. These measures are now the main source of trade protection.

Nikolaus Wolf, 11 June 2018

Jerónimo Carballo, Kyle Handley, Nuno Limão, 16 March 2018

Economic downturns can be both a cause and an effect of uncertainty. This column argues that uncertainty has international spillovers that can be mitigated via credible international trade agreements such as NAFTA, which provided US firms with valuable insurance against the widespread threat of a global trade war during the 2008 crisis. However, the credibility and insurance value of these agreements is being trumped by events such as Brexit, the renegotiation of NAFTA, and US threats of a trade war, which mark the start of a ‘trade cold war’.

Simon Evenett, Johannes Fritz, 12 December 2017

The focus of much of the literature on the trade impact of crisis-era protectionism on import restrictions is misplaced. This column introduces the latest Global Trade Alert report, which shows that while import restrictions played their part in holding back European exporters, trade-distorting subsidies were more important.

Gabriel Felbermayr, Marina Steininger, Erdal Yalcin, 22 November 2017

The Trump administration intends to restructure US international trade relations with its major trade partners to correct what it perceives to be unfair trade and establish a ‘level playing field’. This column uses a structurally estimated and simulated trade model to analyse three potential protectionist policies that have been discussed by the administration. The results suggest that the promise to create more jobs and investment in the US through such policies is a fallacy.

Wilhelm Kohler, Gernot Müller, 08 November 2017

The EU’s position in the Brexit negotiations is based on the premise that the four freedoms of the single market – goods, capital, services, and labour – are indivisible. This column argues that this indivisibility claim has no economic foundations, and that negotiating on this premise risks unnecessary harm. Reintroducing trade barriers will inflict damage on both sides of the Channel. The possibility that abandoning indivisibility may cause harm through cherry picking, or through potential further exits, doesn’t justify a hard Brexit scenario.

Antoine Bouët, David Laborde, 06 September 2017

During his election campaign, Donald Trump repeatedly announced that he would impose tariffs on imports from China, Mexico, and Germany. This column evaluates the likely outcomes should the US instigate trade wars by imposing such tariffs. In all scenarios, the net effect on US welfare and GDP is either zero or negative. Such trade wars would also have wider negative effects for the trading partners, and potentially, the world economy.

Hugo Erken, Philip Marey, Maartje Wijffelaars, 15 August 2017

Since taking office, US President Donald Trump has been an increasingly vocal proponent of protectionist measures. This column presents five reasons why he is unlikely to resort to full-blown protectionism: political motivations, WTO membership, the possibility of retaliation, the existence of global value chain integration and revenue streams, and the fact that automation rather than trade has caused most job losses in the US. If Trump does resort to protectionism, however, and other countries retaliate, US GDP could face cumulative losses of up to 4.5% over two years.

Simon Evenett, Johannes Fritz, 06 July 2017

The year to date has seen profound changes in G20 protectionist dynamics.This column presents the lastest Global Trade Report, which asks whether President Trump’s bluster has accomplished what the G20 failed to deliver – namely, less protectionism.

Alan de Bromhead, Alan Fernihough, Markus Lampe, Kevin O'Rourke, 24 March 2017

With Brexit looming, and protectionist pressures mounting elsewhere in the developed world, the question of whether trade policy matters is taking on more significance. This column looks at the extent to which trade policy was responsible for the shift towards intra-imperial trade in the interwar period. Both tariffs and quotas increased the Empire’s share of British trade, suggesting that trade policy mattered more for interwar trade patterns than the cliometric literature has suggested.

Italo Colantone, Piero Stanig, 20 February 2017

The revival of nationalism in western Europe, which began in the 1990s, has been associated with increasing support for radical right parties. This column uses trade and election data to show that the radical right gets its biggest electoral boost in regions most exposed to Chinese exports. Within these regions communities vote homogenously, whether individuals work in affected industries or not. 

Alexander Wagner, Richard Zeckhauser, Alexandre Ziegler, 24 February 2017

The election of Donald Trump as president of the United States will profoundly affect the US and world economies. This column argues that the stock market has already identified winners and losers among companies and industries. It finds, for example, that investors expect US firms paying high taxes to be relative winners from the Trump presidency, and firms with substantial foreign involvement to be relative losers.   

Aksel Erbahar, Yuan Zi, 10 October 2016

With the US presidential debates, talk of trade protectionism is on the rise. This is worrisome for economists, who generally argue that protection hurts consumers by raising final good prices, particularly in a world with increasingly integrated global value chains. This column presents new evidence for ‘cascading protection’, showing that US protection of inputs has increased the probability of petitions for protection by their downstream users.

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