|
on International Trade |
|
Issue of 2025–08–25
fifteen papers chosen by Nicola Daniele Coniglio, Università degli Studi di Bari “Aldo Moro” |
| By: | Nicolo Tamberi |
| Date: | 2023–12 |
| URL: | https://d.repec.org/n?u=RePEc:sus:susphd:0223 |
| By: | Alen Mulabdic (World Bank); Yoto Yotov (School of Economics, Drexel University) |
| Abstract: | We study the impact of geopolitical risks on international trade. To this end, we use the Geopolitcal Risk (GPR) index of Caldara and Iacoviello (2022) and an empirical gravity model. The impact of spikes in GPR on trade is negative, strong, and heterogeneous across sectors. Specifically, we find that increases in geopolitical risk reduce trade by about 30-40%. These effects are equivalent to a global tariff increase of up to 14%. Services trade is most vulnerable to geopolitical risks, followed by agriculture, while the impact on manufacturing trade is moderate. These negative effects are partially mitigated by cultural and geographic proximity, as well as by the presence of trade agreements. |
| Keywords: | Geopolitical Risks, International Trade, Structural Gravity |
| JEL: | F13 F14 F16 F51 F52 H56 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:drx:wpaper:202532 |
| By: | Irene Iodice |
| Abstract: | This paper quantifies the value of timely WTO notifications for Technical Barriers to Trade (TBTs). Using French firm-level export data, I find that advance notice halves the negative impact of TBTs on export participation, by reducing temporary exits and supporting entry, particularly among small and medium-sized firms. Exploiting variation in notification delays, I show that this effect operates by reducing uncertainty about compliance costs, rather than by giving firms more time to adjust. A theoretical framework with firm heterogeneity and trade policy uncertainty formalizes this mechanism: notification lowers uncertainty, reducing firms’ incentives to delay or suspend exports. The quantitative importance of this effect is equivalent to avoiding a tariff increase of up to 28 percentage points. |
| JEL: | F13 F14 D84 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12015 |
| By: | Bian, Alice; Dikau, Simon; Miller, Hugh; Pierfederici, Roberta; Stern, Nicholas; Ward, Bob |
| Abstract: | As the world’s largest trading nation, China holds a dominant position in global green manufacturing, particularly through the development of the so-called ‘new three’ clean energy technologies – that is, electric vehicles, lithium-ion batteries and solar panels. There are tremendous opportunities for emerging markets and developing countries to improve their integration into global supply chains for clean energy technologies by leveraging intra-regional trade that boosts their manufacturing competitiveness and exports of higher-value-added products. This policy insight seeks to evaluate China’s role in supply chains for renewable energy technologies, and how the country can support the energy transition in other countries, particularly those in the Association of Southeast Asian Nations (ASEAN) region and the Belt and Road Initiative (BRI). |
| Keywords: | ASEAN; Asia; Association of Southeast Asian Nations; batteries; Belt and Road Initiative; China; China ETS; clean energy; climate finance; electric vehicles; international agreement; international climate finance; Just Energy Transition Partnerships; manufacturing; net zero transition plan; regional comprehensive economic partnership; South-east Asia; supply chains; transition-critical materials |
| JEL: | R14 J01 |
| Date: | 2024–02–21 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:129230 |
| By: | Gabriel Felbermayr (Vienna University of Economics and Business); Yoto Yotov (School of Economics, Drexel University) |
| Abstract: | Contrary to the quasi-unanimous academic consensus, we argue that bilateral trade imbalances may be relevant for trade policy. To this end, we employ the workhorse trade model -- the gravity equation -- as a forensic tool to detect deviations of the actual bilateral trade imbalances from their predicted "fair" counterparts, which are constructed based on fully symmetric bilateral trade costs and while taking into account all country-specific characteristics, such as macroeconomic conditions or comparative advantage. Zooming in on the United States, we find that 92% of the existing U.S. bilateral trade imbalances can be explained without relying on asymmetric bilateral trade costs. Thus, there is little room for non-reciprocal bilateral trade barriers to lead to bilateral trade imbalances. However, we also detect some systematic bilateral trade cost asymmetries between the U.S. and certain countries and industries, which could meaningfully inform bilateral policy discussions. |
| Keywords: | Bilateral Trade Imbalances, Structural Gravity, Asymmetric Trade Costs. |
| JEL: | F10 F13 F14 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:drx:wpaper:202531 |
| By: | Lionel Fontagne (Paris School of Economics); Krasimir Shishmanov (Tsenov Academy of Economics); Penka Shishmanova (Tsenov Academy of Economics); Yoto Yotov (School of Economics, Drexel University) |
| Abstract: | Economic gains from trade integration channel through inward or outward multilateral resistance terms, hence through consumption or production effects. But these impacts differ in their relative intensity among members of the integrated region, which leads to asymmetric outcomes. We study these asymmetric effects of European integration on the exports vs. imports of the members of the Single Market and obtain disaggregated asymmetric EU estimates for 170 industries. The econometric analysis delivers a rich database of more than 9, 300 estimates of the EU effects on trade among its members. Three main findings emerge from our analysis. First, previous estimates where asymmetries were silenced underestimated the gains from EU integration. Second, these asymmetries in the effects of the Single Market on the members’ trade are very large. Third, the EU has benefited disproportionately the consumers in older/richer members and the producers in the new/poorer joiners. |
| Keywords: | European Integration, The Single Market, Asymmetric Trade Costs |
| JEL: | F10 F14 F16 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:drx:wpaper:202533 |
| By: | Vanessa I. Alviarez; Michele Fioretti; Ken Kikkawa; Monica Morlacco |
| Abstract: | This paper derives a closed-form expression linking aggregate markups on imported inputs to concentration in a model of firm-to-firm trade with two-sided market power. Our theory extends standard oligopoly insights in two dimensions. First, it reveals that markups increase with exporter concentration and decrease with importer concentration, reflecting the balance of oligopoly and oligopsony forces. Second, it adapts conventional market definitions to reflect rigid trading relationships, yielding new concentration measures that capture competition in firm-to-firm trade. Analysis of Colombian transaction-level import data shows these differences are key to understanding markup dynamics in international trade. |
| JEL: | F1 F12 F14 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34114 |
| By: | Hayato Kato; Kensuke Suzuki; Motoaki Takahashi; Hayato Kato |
| Abstract: | We examine how tariffs affect sectoral composition and welfare in an economy with nonhomothetic preferences and sectors being complements---key drivers of structural change. Beyond their conventional role in trade protection, tariffs influence industrial structure by altering relative prices and income levels. We qualitatively characterize these mechanisms and use a quantitative dynamic model to show that a counterfactual 20-percentage-point increase in U.S. manufacturing tariffs since 2001 would have raised the manufacturing value-added share by one percentage point and increased welfare by 0.36 percent. However, if all the U.S. trading partners responded reciprocally, U.S. welfare would decline by 0.12 percent. |
| Keywords: | tariff, ricardian model of trade, structural transformation, nonhomothetic preferences, capital accumulation, trade war |
| JEL: | F11 F13 F16 F43 O41 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12050 |
| By: | John S. Becko; Gene M. Grossman; Elhanan Helpman |
| Abstract: | As geopolitical tensions intensify, great powers often turn to trade policy to influence international alignment. We examine the optimal design of tariffs in a world where large countries care not only about economic welfare but also about the political allegiance of smaller states. We consider both a unipolar setting, where a single hegemon uses preferential trade agreements to attract partners, and a bipolar world, where two great powers compete for influence. In both scenarios, we derive optimal tariffs that balance terms-of-trade considerations with strategic incentives to encourage political alignment. We find that when geopolitical concerns are active, the optimal tariff exceeds the classic Mill-Bickerdike level. In a bipolar world, optimal tariffs reflect both economic and political rivalry, and may be strategic complements or substitutes. A calibration exercise using U.N. voting patterns, an estimate of the cost of buying votes in the U.N., and military spending suggests that geopolitical motives can significantly amplify protectionist pressures and that the emergence of a second great power can contribute to a retreat from globalization. |
| JEL: | F13 F52 F53 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34108 |
| By: | Hyeongwoo Kim; Madeline H. Kim; Divya Sadana; Peng Shao; Jie Zhang |
| Abstract: | Donald Trump argued that the Korea-U.S. Free Trade Agreement (KORUS FTA) was a "horrible deal, " pointing to a substantial increase in the U.S. trade deficit with Korea following the agreement's implementation in March 2012. Notably, during the same period, the U.S. trade balance with numerous other major trading partners, none of which maintained an FTA with the United States, also deteriorated, raising doubts as to whether the KORUS FTA was the primary cause of the observed imbalance. This study evaluates the causal effect of the KORUS FTA on the U.S.–Korea trade balance using a difference-in-differences framework, complemented by event-study and synthetic control analyses as robustness checks. The empirical findings, after accounting for business cycle fluctuations, provide overall support for Trump's assertion. |
| Keywords: | KORUS FTA; Trade Deficit; Difference-in-Differences; Causal Effect; Event Study; Synthetic Control Analysis |
| JEL: | F13 F14 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:abn:wpaper:auwp2025-05 |
| By: | Wan, Lu; Zhou, Yanxi; Wang, Ying; Zhao, Tiantian |
| Abstract: | Following the “dual carbon” goals in 2021, which emphasize achieving the carbon peak by 2030 and carbon neutral by 2060, China introduced a “dual circulation” strategy to connect domestic and international trade. Leveraging the quantile regression model, this study examines the impact of green total factor productivity, trade penetration, foreign direct investment, and sustainable finance on carbon emissions (CO2). Furthermore, a mediating model is established from another perspective to discover the mechanism, respectively, testing how trade, foreign direct investment, and sustainable finance affect carbon emissions via green total factor productivity. The findings indicate that green total factor productivity exerts an inverted “U-shaped” effect on carbon emissions within a certain threshold of the total CO2 volume. While the relationship between the green total factor productivity and CO2 becomes a significant “U-shaped” when the total CO2 goes beyond a certain level. Meanwhile, foreign direct investment penetration and sustainable finance contribute positively to carbon emissions reduction, whereas trade penetration notably increases carbon emissions. Transition mechanisms with international cooperation, trade penetration, foreign direct investment penetration, and sustainable finance also affect CO2 through the green total factor productivity channel. As suggested, China should tailor its low-carbon transition strategies, drawing on global insights and considering its unique national development. Broadly, efficiency in the production process and low-carbon transition are preferred (i.e. improved green total factor productivity), which will balance economic development and environmental protection. The adoption and promotion of a consistent framework for sustainable finance are crucial, as they help enterprises in developing countries access more global sustainable finance. This study also notes that participating more in international trade that embodies low-carbon concepts and introducing green foreign direct investment helps developing countries improve resource efficiency and productivity. |
| Keywords: | carbon peak; correlation; green total factor productivity; sustainable finance; trade penetration |
| JEL: | F3 G3 |
| Date: | 2025–12–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:129148 |
| By: | Rickard, Stephanie |
| Abstract: | In 2025, the United States raised tariffs to rates not seen for more than a century. These tariffs were not part of a carefully designed industrial strategy. Instead, the second Trump administration distanced itself from existing industrial policy initiatives and indicated a desire to roll back government-funded subsidies for businesses. This article examines the rationale behind the United States’ pivot from subsidies to tariffs and explores implications for trade partners and multilateral institutions. |
| Keywords: | tariffs; industrial policy; trade; subsidies |
| JEL: | J1 R14 J01 |
| Date: | 2025–08–11 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128326 |
| By: | Khalil, Makram; Rouillard, Pierre; Strobel, Felix |
| Abstract: | We find evidence that US manufacturing sectors experience US import tariffs either as supply-side or demand-side shocks, depending on the location of the sector and the affected products in the US production network. Using local projections in a panel of US manufacturing sectors, we find that US import tariffs – in particular including the 2018-19 tariff hikes – led to sectoral output contractions via two different channels: (1) Tariff increases act as negative supply shocks for sectors that use the affected goods as input in production and thus face rising input costs. (2) Tariff increases act as negative demand shocks for sectors whose customers experience the tariff increase as a negative supply shock and reduce their production. Though the aim of tariffs often is to protect local industries, we find only limited evidence of such a protective effect. Overall, our finding suggests that tariffs markedly reduce US manufacturing production and that the role of input-output linkages is key for understanding the transmission of import tariff shocks. |
| Keywords: | Import tariffs, sectoral production and prices, input-output-tables, production networks, United States. |
| JEL: | E22 E32 F13 |
| Date: | 2025–08–09 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:125698 |
| By: | Ismet Gocer; Julia Darby; Serdar Ongan |
| Abstract: | Important game-changer economic events and transformations cause uncertainties that may affect investment decisions, capital flows, international trade, and macroeconomic variables. One such major transformation is Brexit, which refers to the multiyear process through which the UK withdrew from the EU. This study develops and uses a new Brexit-Related Uncertainty Index (BRUI). In creating this index, we apply Text Mining, Context Window, Natural Language Processing (NLP), and Large Language Models (LLMs) from Deep Learning techniques to analyse the monthly country reports of the Economist Intelligence Unit from May 2012 to January 2025. Additionally, we employ a standard vector autoregression (VAR) analysis to examine the model-implied responses of various macroeconomic variables to BRUI shocks. While developing the BRUI, we also create a complementary COVID-19 Related Uncertainty Index (CRUI) to distinguish the uncertainties stemming from these distinct events. Empirical findings and comparisons of BRUI with other earlier-developed uncertainty indexes demonstrate the robustness of the new index. This new index can assist British policymakers in measuring and understanding the impacts of Brexit-related uncertainties, enabling more effective policy formulation. |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2507.02439 |
| By: | Alves, Ana Cristina; Alden, Christopher |
| Abstract: | This article explores the intricacies of replicating China’s structural economic transformation through special economic zones (SEZs) in Africa, with a focus on the Eastern Industry Zone (EIZ) in Ethiopia. Combining insights from empirical research and the literature on China’s development model, African SEZs and Chinese economic and trade cooperation zones (ETCZs) in Africa, we contend that while static industrialisation policies can be transposed more readily, the dynamic aspects that underpin China’s model face challenges due to differences in institutional capacity and contextual synergies (internal and external). This hampers the efficacy of ETCZs in steering structural economic transformation. The article advocates for a more creative adaptation process, urging dynamic learning and leadership level innovation to address institutional and structural weaknesses while reducing vulnerability to externalities. |
| Keywords: | China-Africa; economic zones; Chinese model emulation; industrialisation challenges; policy adaptation; African economic transformation; EIZ Ethiopia |
| JEL: | O10 |
| Date: | 2024–04–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:121446 |