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on International Trade |
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Issue of 2025–12–08
ten papers chosen by Nicola Daniele Coniglio, Università degli Studi di Bari “Aldo Moro” |
| By: | Gustavo de Souza; Haishi Li; Ziho Park; Yulin Wang |
| Abstract: | On April 2, 2025, U.S. President Donald Trump announced the "Liberation Day" tariffs, creating an unexpected, precisely timed, and country-specific episode of trade policy uncertainty. The proposal threatened U.S. trade partners with additional tariffs ranging from 10% to 50%, depending on the outcome of bilateral negotiations. Using transaction-level U.S. import data, we find that firms rapidly shifted sourcing from countries facing high tariff risk to those facing low tariff risk. Firms didn't change their total import values but this reallocation came at the cost of higher import prices. Firms with stickier or contract-dependent trade relationships and greater reliance on trade finance drove this preemptive reallocation, which is consistent with them being hit hardest had tariffs been implemented before they could adjust. Our findings demonstrate that even brief periods of trade policy uncertainty can significantly disrupt supply chains. |
| Keywords: | global supply chains, trade war, trade adjustment |
| JEL: | F14 F63 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12285 |
| By: | Korhonen, Iikka; Simola, Heli |
| Abstract: | We examine impact of economic sanctions on Russian import prices using detailed data on other countries' exports to Russia. We find that unit import prices of goods sanctioned by trading blocs such as the European Union have increased, often drastically, and even when imported to Russia from countries that have not formally imposed sanctions on Russia. For some countries, the unit export prices to Russia for non-sanctioned goods have also risen. These results strongly suggest that trade sanctions have been effective in limiting Russia's access to sanctioned goods. |
| Keywords: | Sanctions, foreign trade, Russia |
| JEL: | F12 F14 F51 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bofitp:333422 |
| By: | Laura Alfaro; Davin Chor |
| Abstract: | This paper documents stylized facts about the "Great Reallocation" in US supply chain trade following the 2018–2019 tariff shocks and the April 2025 Liberation Day announcements. We find that: (i) The US has decoupled from China but not from the world overall. (ii) US imports diversified mainly among its top-20 partners, rather than expanding to new source countries. (iii) Local linear projections confirm ongoing declines in China's import shares, with compensating increases from Vietnam, Mexico, and Taiwan. (iv) Most of this shift occurred along the product-level intensive margin, though extensive margin adjustments became more pronounced for Vietnam and India from 2021-2024. (v) After a period of "wait and see", the decline in import shares from China spread to contract-intensive and relationship-sticky goods by 2021-2024. (vi) Early 2025 data suggest that trade reallocation has already accelerated after Liberation Day, in favor of trade partners facing lower additional tariffs and with geographically proximate supply networks. Together, these findings show that the US-China tariff shocks have unwound the US' sourcing from China back to where it stood at the time of China's WTO accession. |
| JEL: | F01 F10 F13 F14 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34490 |
| By: | Christoph Boehm; Aaron B. Flaaen; Nitya Pandalai-Nayar; Jan Schlupp |
| Abstract: | We develop a new algorithm to map confidential firm-level export transactions to their underlying establishments that can be implemented on U.S. microdata. Using this procedure, we construct a novel micro-dataset of U.S. exports at the plant level. Aggregation of these data permits more accurate measurement of exporting at the subnational level (e.g., county, MSA, etc.) than was previously possible. The data reveal exports to be much more geographically concentrated than both employment and manufacturing sales, implying that some regions are heavily reliant on foreign demand. To illustrate the consequences of such exposure, we study the effects of the trade collapse during the Great Recession on local labor markets. Counties experiencing greater declines in foreign demand performed worse in terms of employment, pay, and wages during the Great Recession. A similar analysis implemented with publicly available imputed export data—a common practice in the literature—fails to replicate these estimates. |
| JEL: | F0 F10 F14 F16 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34508 |
| By: | Sheldon, Ian; Chow, Daniel C.K. |
| Abstract: | In a forthcoming paper, Chow and Sheldon (2024) conclude that US challenge(s) to Canada’s dairy tariff rate quotas (TRQs), under the US-Mexico-Canada (USMCA) preferential trade agreement’s (PTA) dispute resolution mechanism, are really a “fuss about nothing”, and no more than a response to lobbying by its dairy industry. However, this conclusion misses the possibility that the United States, in its enthusiasm for using the USMCA mechanism, is revealing a key component of its approach to settlement of trade disputes. In this context, the current paper focuses on answering two related questions: (i) are proponents of reviving the World Trade Organization’s (WTO) Appellate Body acting in the vain hope of securing US support for its reform; and (ii), has the United States irrevocably moved on by creating and using parallel dispute resolution mechanisms in US-led PTAs, that can be used to revolve WTO-type disputes as well as specific PTA disputes? |
| Keywords: | Livestock Production/Industries, International Relations/Trade |
| Date: | 2024–06–01 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea24:345095 |
| By: | Paulsen, Mona |
| Abstract: | This article considers whether Members of the World Trade Organization (WTO) can develop a collective response to a globally welfare-damaging situation that impacts individual Members differentially. We conclude that collective action remains within the letter and spirit of the WTO Agreements. We set out the enabling procedures for collective action in a WTO dispute setting, in particular, the use of the rarely used situation complaint. We were motivated by the United States’ move to redraw its trade relations and break from its international trade commitments through bilateral negotiations in which it holds asymmetric leverage, buttressed by a pre-emptive announced escalation in response to any attempt by counterparties to join in forging a collective response. We conclude that, if undertaken, collective action can raise each Member’s voice into a countervailing choir and, more importantly, it can reinforce the mutual benefits derived from the multilateral trading system. Collective action thus serves a double purpose in engaging domestic concerns and the collective interests of those intending to preserve the multilateral system on which each Member depends |
| Keywords: | WTO; collective action; dispute settlement; situation complaint; MFN |
| JEL: | F13 F51 F53 K33 K34 |
| Date: | 2025–11–27 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:129560 |
| By: | Alberto Cavallo; Paola Llamas; Franco M. Vazquez |
| Abstract: | We use high-frequency retail microdata to measure the short-run impact of the 2025 U.S. tariffs on consumer prices. By matching daily prices from major U.S. retailers to product-level tariff rates and countries of origin, we construct price indices that isolate the direct effects of tariff changes across goods and trading partners. Prices began rising immediately after the broader tariff measures announced in early March and continued to increase gradually over subsequent months, with imported goods rising roughly twice as much as domestic ones. Our estimated retail tariff pass-through is 20 percent, with a cumulative contribution of about 0.7 percentage points to the all-items Consumer Price Index by September 2025. Our results show that tariff costs were gradually but steadily transmitted to U.S. consumers, with additional spillovers to domestic goods. |
| JEL: | E31 F13 F14 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34496 |
| By: | Paul-Emile Bernard (University of Paris-Dauphine, PSL); Jie Li (University of Jinan, Guangzhou); Gary Ziwen Zu (University of California, San Diego) |
| Abstract: | This paper investigates how the Chinese government reallocated public resources to mitigate the effects of the U.S.–China trade war. Using a novel firm-level dataset linking tariff exposure with subsidies and procurement contracts between 2015 and 2020, we identify exogenous variation through a Bartik (shift–share) design based on pre-war trade patterns. In the first step, focusing on listed firms, we show that those more exposed to U.S. tariffs received significantly higher direct subsidies—about 7.7% more for a one-standard-deviation increase in exposure. Yet, support primarily targeted politically connected rather than productive firms, suggesting allocation distortions. In the second step, we extend the analysis to a broader panel including small and medium-sized firms using public procurement data. Local favoritism dominates: firms operating within their own jurisdiction received contracts roughly three times larger, especially when exposed to U.S. tariffs. Together, these findings reveal that both national and local authorities cushioned the trade shock through politically and territorially selective interventions. |
| Keywords: | Subsidy, Public Procurement, Trade War, Tariffs |
| JEL: | F13 F51 H25 H57 H70 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:dia:wpaper:dt202509 |
| By: | Márta Bisztray (Hungarian Academy of Science, Centre for Economic and Regional Studies); Gábor Békés (Central European University); Alexandros Charos (WIFO); Klaus Friesenbichler; Miklós Koren (Central European University); Agnes Kügler; Balázs Lengyel (HUN-REN CERS – Institute of Economics); Amanda De Pirro (HUN-REN CERS – Institute of Economics); Birgit Meyer (WIFO) |
| Abstract: | Recent events have posed considerable challenges to supply chain, as demonstrated by trade data. Yet, firm-level information on the recent challenges remains scarce. The Supply Chain Disruption Survey addresses this gap by generating insights into firms' experiences and expectations regarding their supplier relationships, with a special focus on the role of intangibles and changes over time. Conducted as part of the RETHINK-GSC Horizon research project, the survey was carried out in Austria, Denmark, Germany, and Hungary between mid-2023 and spring 2024. The survey focused on medium-sized and large firms operating in various manufacturing industries. This paper has two main objectives: first, it provides information about the survey's background, design, questionnaire, and implementation; and second, it presents the key patterns visible in the survey. The results indicate that sourcing remains anchored in Europe but is diversified. Experiencing disruption was nearly universal between 2020 and 2023, mostly due to COVID-19, but also due to the war in Ukraine and trade policy changes. Despite the perception of the disruptions being of temporary nature, the anticipation of risk increased. Firms adopted different risk mitigation strategies, including diversifying their supplier portfolio and information sharing with suppliers. |
| Date: | 2025–11–17 |
| URL: | https://d.repec.org/n?u=RePEc:wfo:wpaper:y:2025:i:716 |
| By: | Alexander Bertermann (ifo Institute, University of Munich); Wolfgang Dauth (Institute for Employment Research (IAB), University of Bamberg); Jens Suedekum (DICE, Heinrich-Heine-Universität Düsseldorf); Ludger Woessmann (University of Munich, ifo Institute) |
| Abstract: | How do firms and workers adjust to trade and technology shocks? We analyze two mechanisms that have received little attention: training that upgrades skills and early retirement that shifts adjustment costs to public pension systems. We combine novel data on training participation and early retirement in German local labor markets with established measures of exposure to trade competition and robot adoption. Results indicate that negative trade shocks reduce training—particularly in manufacturing—while robot exposure increases training—particularly in indirectly affected services. Both shocks raise early retirement among manufacturing workers. Structural change thus induces both productivity-enhancing and productivity-reducing responses, challenging simple narratives of labor market adaptation and highlighting the scope for policy to promote adjustment mechanisms conducive to aggregate productivity. |
| Keywords: | training; retirement; trade; technological change; automation; robots; firms; workers; labor market; |
| JEL: | J24 J26 O33 F16 R11 |
| Date: | 2025–11–11 |
| URL: | https://d.repec.org/n?u=RePEc:rco:dpaper:551 |