Massimiliano Calì, 16 October 2018

The US-China trade war has rapidly escalated, promising to disrupt trade flows between the two countries and beyond. This column provides the first estimates of trade and investment effects of the trade war on East Asia, one of the most exposed regions. By combining trade and tariff data, it provides some order of magnitude of the expected effects and identifies the possible winners and losers from the trade war in the region.

Menzie Chinn, 08 October 2018

Eric Bond, Mario Crucini, Tristan Potter, Joel Rodrigue, 27 September 2018

The Trump administration’s recent tariff increases have prompted comparisons to interwar tariff history. This column investigates tariffs during this period, drawing out lessons on their macroeconomic impacts for the US and its trade partners. The recessionary impact of recent tariffs is likely to be smaller and less widespread than those imposed during the interwar period, provided that tariff levels don’t escalate too dramatically through retaliation.

Hylke Vandenbussche, William Connell, Wouter Simons, 24 August 2018

While talks of a preferential agreement between the US and EU were put aside when President Trump came in office, the presidents of the two trading partners have recently expressed a new desire to aim for zero tariffs and non-tariff measures between them. This column estimates the gains from such a deal, taking into account global value chains and input-output linkages in production. It finds that free trade would substantially benefit both the EU and the US, and these gains would result from the reduction in non-tariff barriers rather than tariffs. 

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.

Yi Huang, Chen Lin, Sibo Liu, Heiwai Tang, 10 August 2018

Tariffs intended to reduce competition from foreign firms can backfire by also raising the costs of imported inputs for domestic firms. This column examines the market responses to the Trump administration’s initial and subsequent announcements of tariffs on imports from China. US firms that are more dependent on exports to and imports from China experienced lower stock and bond returns but higher default risks around the date of the announcement. Firms’ indirect exposure to US-China trade through domestic input-output linkages affects their responses to the announcements. 

Chad Bown, Eva (Yiwen) Zhang, 31 July 2018

Dennis Novy, 27 July 2018

When President Trump recently spoke of his hope for "a great bilateral trade agreement” with the UK after Brexit, what did he really mean? Dennis Novy of the University of Warwick describes what these political good intentions may look like in reality, the problems that both sides will have to solve to agree a UK-US deal, and the factors that might derail any agreement.

Chad Bown, Euijin Jung, Zhiyao (Lucy) Lu, 26 July 2018

Caroline Freund, Michael Ferrantino, Maryla Maliszewska, Michele Ruta, 24 July 2018

Gabriel Felbermayr, Jens Südekum, 28 June 2018

Jeffrey Frankel, 27 June 2018

Brian Varian, 23 June 2018

Brexit has sparked interest in trade agreements between Britain and the Commonwealth. This has a precedent in the Edwardian era, when the Dominions adopted policies of imperial preference toward imports from Britain. This column argues that New Zealand’s policy of imperial preference, enacted in 1903, was ineffective in diverting trade toward Britain, suggesting that trade policies within the British Empire or Commonwealth do not always achieve what they intend. 

Chad Bown, Euijin Jung, Zhiyao (Lucy) Lu, 19 June 2018

Nikolaus Wolf, 11 June 2018

Stefan Legge, Piotr Lukaszuk, Simon Evenett, 17 April 2018

While the Trump administration’s proposed tariff increases on Chinese imports have grabbed the headlines, few realise that other trading partners have also raised tariffs on Chinese trade. This column examines the effects of the EU removing China from its General System of Preferences in 2012. As a result of the move, $242 billion worth of EU imports from China were subject to higher tariffs, raising EU customs revenue by an estimated $4 billion.

Filip Tarlea, 07 April 2018

Preferential trade agreements don’t happen overnight – they require lengthy negotiations. This column examines the effect the process of negotiating an agreement has on trade between the negotiating parties. The results suggest that during prolonged negotiations, the expectation of the agreement, or uncertainty before the signing of the agreement, undermine bilateral trade growth.

Simon Evenett, Johannes Fritz, 24 January 2018

On 22 January 2018, President Trump imposed safeguard duties on imported washing machines and solar panels and cells. This column analyses import surges into the US from 2006 to 2016 to put these tariff increases in perspective. Using a simple, theory-inspired method for identifying surges, it finds that during 2014-6 a category of manufactured good in the US had a one-in-32 chance of witnessing an import surge each year. US import surges aren’t concentrated in sectors where China has severe excess capacity either.

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