Pablo Fajgelbaum, Pinelopi Goldberg, Patrick Kennedy, Amit Khandelwal, 12 April 2019

The 2018 tariff hikes reversed a decades-long push by the US for lower global trade barriers around the world. This column examines the impact of the resulting trade war on the US economy. It estimates a $68.8 billion annual loss to US consumers and firms from higher import prices, with an aggregate annual loss of $7.8 billion when producer gains and tariff revenues are factored in. It also argues that US tariffs protected politically competitive counties, whereas retaliations by other nations targeted strongly Republican counties.

Jeffrey Frankel, 29 March 2019

The supposed deadline for a conclusion to China–US trade negotiations has been postponed until late April. This column argues that the structural reform aspect of the negotiations is reminiscent of US negotiations with Japan three decades ago, and that the Structural Impediments Initiative between the two countries could, in theory, serve as a useful model for the current US–China negotiations. The question is whether Presidents Trump and Xi have as firm a grasp on economic principles as their predecessors. 

Yasuyuki Todo, 27 February 2019

Raphael Auer, Barthélémy Bonadio, Andrei Levchenko, 07 February 2019

The tide has turned in international trade, with watershed political moments across the world showing the growing popularity of protectionist measures. This column analyses the relationship between the distributional effects of trade and voting patterns by modelling a scenario in which NAFTA is dismantled. It finds that the areas that voted most overwhelmingly for the Trump administration are the same as those that would experience the greatest wage decreases if NAFTA were to be revoked, due to the strong correlation in areas that face import competition from and export exposure to NAFTA partners.

Treb Allen, Caue Dobbin, Melanie Morten, 14 January 2019

A vigorous debate exists about the economic benefits of building a border wall between the US and Mexico. Yet, empirical evidence to guide the debate has lagged behind. This column studies the economic impact of the Secure Fence Act of 2006, which built 550 new miles of fence on the US–Mexico border. At a construction cost of $7 per person, the fence led to a small reduction in migration but had negligible effects on the economy, with high-skilled US workers losing $4.60 per year in income, and low-skilled US workers gaining just $0.36 per year. 

Jeffrey Frankel, 08 January 2019

Simon Evenett, Johannes Fritz, 14 December 2018

Presidents Trump and Xi effectively declared a truce in their trade war at the recent G20 Summit in Buenos Aires, giving their trade negotiators three months to settle their differences. This column argues that focusing on the bilateral trade war overlooks similarities in the trade distortions facing Chinese and American exporters worldwide in the form of export incentives, subsidies to domestic firms, and import tariff increases. It concludes that these two trading giants have more in common than they may realise.

Steven Brakman, Harry Garretsen, Tristan Kohl, 01 December 2018

Axel Dreher, Valentin Lang, B. Peter Rosendorff, James Raymond Vreeland, 24 November 2018

Countries that vote with the US when serving on the UN Security Council also receive more financial assistance. This column uses voting records in the Council to show that when these countries were US allies, they received more in US aid, but when the countries were not natural allies, they received more financial assistance from US-dominated international institutions instead.

Chad Bown, 30 October 2018

President Trump’s protectionism has a distinctive focus on disrupting US access to global supply chains. This column reveals that the major economies had in fact begun to impose additional trade protection on intermediate inputs even prior to 2016. New barriers targeting cross-border supply chains simply arose through policies aside from headline tariffs. Some of this new protection has also already spread beyond China’s trade and begun to cover exports from other countries. These results, combined with more recent policy actions, widen the possibility of a negative protectionist impact on the global sourcing of parts and components.

Stefano Ramelli, Alexander Wagner, Richard Zeckhauser, Alexandre Ziegler, 29 October 2018

President Trump’s election and the nomination of Scott Pruitt to lead the Environmental Protection Agency changed expectations of US climate change policy. This column uses movements in US stock prices to show that firms with high carbon intensity benefited, as expected, but so did firms with ‘responsible’ strategies on climate change. A significant group of investors raise the value of firms taking a long-term perspective. 

Christopher Knittel, 11 October 2018

Menzie Chinn, 08 October 2018

Lubos Pastor, Pietro Veronesi, 28 September 2018

The vote for Brexit and the election of protectionist Donald Trump to the US presidency – two momentous markers of the ongoing pushback against globalisation – led some to question the rationality of voters. This column presents a framework that demonstrates how the populist backlash against globalisation is actually a rational voter response when the economy is strong and inequality is high. It highlights the fragility of globalisation in a democratic society that values equality.

Andrew Rose, 18 September 2018

The export consequences of a country’s leadership style are one manifestation of ‘soft power’.  This column uses Gallup’s World Poll data and a gravity model of trade to examine the link between the attractiveness of the US to foreigners under the Trump administration and US exports. The results suggest a decline in foreign approval of US leadership between 2016 (Obama’s last year) and 2017 (Trump’s first year) may have lowered US exports by at least 0.2% or, over $3 billion.

Peter T. Leeson, 01 September 2018

President Trump frequently refers to Special Counsel Robert Mueller’s investigation into possible Russian collusion during the 2016 presidential election as a 'witch hunt'. This column argues that competition might be behind both this current ‘witch hunt’ and Europe’s ‘witch craze’, which between 1520 and 1700 claimed the lives at least 40,000 people. Today it is competition between Democrats and Republicans; in 16th and 17th century Europe, it was competition between Catholicism and Protestantism in post-Reformation Christendom.

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

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