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on International Trade |
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Issue of 2026–01–26
thirteen papers chosen by Nicola Daniele Coniglio, Università degli Studi di Bari “Aldo Moro” |
| By: | Mau, Karsten (RS: GSBE other - not theme-related research, Macro, International & Labour Economics); Vicencio , Antonio (RS: GSBE other - not theme-related research, Macro, International & Labour Economics); Xu, Mingzhi; Zheng, Yawen |
| Abstract: | We develop a method to recover a granular, product-level input-output structure from firm-level customs transactions. Building on an association-rule mining algorithm, we exploit systematic co-occurrences between what firms import and what they export to infer input use in production. Applying the approach to data from several countries, we show that the inferred mappings closely resemble conventional input-output relationships and perform well in external validation exercises. We illustrate the value of these linkages in two applications. First, following China's WTO entry, export growth is accompanied by a pronounced rise in imports of the inputs our mapping associates with those exports. Second, in the 2018-2019 U.S.-China trade war, tariffed Chinese exports to the United States contract, and the shock propagates upstream: China's imports of exposed inputs fall, and third-country suppliers that specialize in those inputs experience the declines in their exports to China, especially if China is a key destination market. Overall, simple pattern recognition tools and micro-level trade data can deliver high-resolution input–output linkages that improve exposure measures and empirical assessments of supply-chain propagation. |
| JEL: | C81 L14 F14 F13 O25 |
| Date: | 2026–01–13 |
| URL: | https://d.repec.org/n?u=RePEc:unm:umagsb:2026001 |
| By: | Agustin Benetrix (Department of Economics, Trinity College Dublin); Hayley Pallan (The World Bank); Ugo Panizza (Geneva Graduate Institute and CEPR) |
| Abstract: | This paper reassesses the relationship between foreign direct investment (FDI) and economic growth in emerging and developing economies. Using cross-country data, it first shows that the relationship between FDI, growth, and local conditions such as financial depth and human capital is not stable over time: complementarities documented in studies based on data from the 1970s and 1980s largely disappear in more recent decades. It then builds a new dataset on sectoral FDI covering 112 emerging and developing economies over the period 1975‐2023 and documents substantial heterogeneity in the association between FDI and sectoral growth. FDI inflows are positively associated with growth in the primary sector, show no robust relationship in the secondary sector, and are negatively associated with growth in the tertiary sector. To interpret these patterns, we examine the role of global value chains (GVCs). We find that FDI is most strongly associated with growth in country‐sectors with low GVC participation, while this relationship weakens or disappears as GVC integration increases. Moreover, the growth effects of FDI depend critically on the type of GVC integration. Backward participation amplifies the positive growth effects of FDI in the primary sector but attenuates them in the secondary sector and worsens the negative effects in tertiary sector, whereas forward participation strengthens the association between FDI and growth in manufacturing. Taken together, the results suggest that the elusive aggregate relationship between FDI and growth reflects a structural transformation in how foreign investment is embedded in global production networks: in highly fragmented value chains, FDI can expand gross activity without generating commensurate domestic value-added growth. |
| Keywords: | FDI, Economic Growth, Global Value Chains |
| JEL: | F21 F23 F14 C23 F60 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:tcd:tcduee:tep0126 |
| By: | Michelena Gabriel; Ernst Christoph; Pablo Bertin |
| Abstract: | This paper assesses the global employment and trade effects of renewed tariff escalation following the reintroduction of the United States' America First strategy in 2025. Using a multiregional input-output (MRIO) framework integrated with a trade model, the analysis captures endogenous adjustments in bilateral trade shares and final demand in response to changes in prices and competitiveness. Three scenarios are simulated to reflect alternative configurations of trade policy: existing tariffs without retaliation, updated tariffs including retaliatory measures, and a potential scenario characterized by de-escalation of the trade conflict. The results indicate that tariff increases generate widespread employment and export losses, with cumulative global job declines exceeding 23 million in the most adverse scenario. Informal and low-skilled workers bear the largest burden, accounting for more than 80 percent of total employment losses, while high-income and upper middle-income countries experience significant contractions in export volumes. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2512.11578 |
| By: | Thierry Mayer; Isabelle Méjean; Mathias Thoenig |
| Abstract: | We develop a model of international trade and geopolitical disputes, embedding a diplomatic game of escalation to conflict within a quantitative model of trade. Bilateral disputes arise exogenously, and rival countries engage in negotiations to avoid war. In equilibrium, negotiations may fail, resulting in conflict. All welfare-relevant geoeconomic factors, such as the realized costs of war, the concessions to prevent it, and the probability of escalation, depend on the opportunity cost of war, itself shaped by observed trade flows. We provide a simple procedure to estimate these factors in a model of trade calibrated to current data. This approach is then used to quantify the geoeconomic factors characterizing the US-China relationship, both historically and under various ``decoupling'' scenarios. We find that the growing US dependence to Chinese products and markets over the past thirty years has increased the cost of geopolitical disputes with China for the US. In this context, decoupling from China through increased tariffs may offer geopolitical benefits. Yet, the analysis highlights a fundamental security dilemma: because export and import dependencies influence bargaining power in negotiations, decoupling may reduce the diplomatic concessions needed to maintain peace but can paradoxically raise the risk of escalation by weakening incentives for restraint. |
| Keywords: | International Trade;Geopolitical Disputes;Interstate Conflict;Geoeconomics;Fragmentation;Derisking |
| JEL: | F1 F5 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cii:cepidt:2025-23 |
| By: | Laura Alfaro; Paula Conconi; Fariha FK Kamal; Zachary ZK Kroll |
| Abstract: | Traditional theories of firm boundaries predict trade between vertically related units of the same firm. Using novel data that combine a comprehensive map ping of U.S. multinationals’ production networks with their customs filings, we uncover a strong positive relationship between input-output linkages and trade between parents and their affiliates. We also find that intrafirm trade is prevalent, particularly between geographically proximate units: three-quarters of affiliates in North America trade with their U.S. parent. These results overturn prior find ings based on survey data on intrafirm trade. Administrative intrafirm records enable correcting measurement errors in survey data, reconciling traditional the ories with empirical evidence. |
| Keywords: | multinational enterprises; intrafirm trade; input-output linkage |
| JEL: | F14 F23 D23 L20 |
| Date: | 2026–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:eca:wpaper:2013/401477 |
| By: | Vazquez Franco Martín; Cavallo Alberto; Llamas Paola |
| Abstract: | This paper examines the short-run impact of the 2025 U.S. tariffs on consumer prices using a novel integration of high-frequency retail pricing data, product-level country-of-origin information, and detailed tariff classifications. By linking daily prices from major U.S. retailers to Harmonized System (HS) codes and import origins, we construct custom price indices that isolate the direct effects of tariff changes across product categories and trading partners. Our analysis reveals rapid pricing responses, though their magnitude remains modest relative to the announced tariff rates and varies by country of origin. Both imported and domestic goods are affected, suggesting broader pricing and supply chain spillovers. These findings offer timely evidence for policymakers, businesses, and consumers navigating the immediate consequences of trade policy changes. |
| JEL: | E31 F14 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:aep:anales:4844 |
| By: | Emily J. Blanchard; Mitchell W. Boice; Robert C. Johnson |
| Abstract: | The effective rate of protection (ERP) is a widely-used tool to evaluate the joint impact of input and output tariffs on the net protection offered to individual sectors. Nonetheless, the theoretical foundations underlying the traditional ERP are decades out of date. In this paper, we provide fresh guidance for policy analysts that seek to measure effective protection, with two core elements. First, we develop a new ERP concept, which measures how much tariffs shift the derived demand for real value added at the sector level. The ERP then has an intuitive interpretation: it is the effective subsidy to buyers of sectoral value added that replicates the impact of the tariff structure on demand. Second, we demonstrate how to compute our ERP index accounting for global value chain linkages. The result is an ERP for the GVC age, in which effective protection depends on the structure of value chains across countries and sectors, and the structure of all tariffs applied globally. We demonstrate the usefulness of our approach by analyzing how recent tariff changes have altered effective protection in the United States and the rest of the world. |
| JEL: | F1 F13 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34670 |
| By: | Jesús Fernández-Villaverde; Tomohide Mineyama; Dongho Song |
| Abstract: | We study how uneven gains from globalization can endogenously generate protectionism as a political equilibrium. Using U.S. data, we document that regions more exposed to import competition display stronger opposition to globalization, especially among households with little financial wealth, and that firms in trade-exposed sectors sharply increase lobbying expenditures. To interpret these patterns, we develop and quantify a general equilibrium Ricardian model with heterogeneous households, input-output linkages, and endogenous trade policy shaped by voting and lobbying. Distributional shocks reallocate political support among voters, while lobbying propagates through production networks, generating strategic complementarities that sustain protectionism. Calibrated to U.S.-China sectoral data from 1991--2019, the model accounts for rising inequality, declining support for globalization, and key aggregate trends in consumption and trade. |
| JEL: | D57 D58 D63 D72 F1 F2 F4 F6 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34672 |
| By: | Simola Antti (European Commission - JRC); Boysen Ole (European Commission - JRC); Ferrari Emanuele (European Commission - JRC); Nechifor Victor (European Commission - JRC) |
| Abstract: | The African Continental Free Trade Area (AfCFTA) holds significant potential to enhance Africa’s economic prospects by deepening integration and reducing reliance on non-African trading partners. A new analysis, incorporating updated tariff offers and various other developments, indicates positive economic outcomes for Africa, including increases in GDP, household disposable income, investments, and intra-African trade. Reducing non-tariff measures (NTMs) is crucial for realizing substantial benefits, with potential spillover effects to extra-African trade further amplifying gains. The AfCFTA is expected to foster industrialization, with manufacturing output showing the most significant increases among sectors. However, regional disparities in economic benefits and potential challenges such as decreased tariff revenues for some countries exist. Complementary policies, effective NTM reduction, and strategic management of public revenue are essential for equitable and sustainable growth across the continent. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc143147 |
| By: | Rodrigo Adão; John Sturm Becko; Arnaud Costinot; Dave Donaldson |
| Abstract: | We use global tariffs to reveal the weights that nations implicitly place on the welfare of their trading partners relative to their own. Our estimated welfare weights suggest that formal and informal rules of the world trading system make countries internalize the impact of their policies onto others to a substantial extent, though not fully. On average, countries place 25% less value on transfers to foreigners than transfers to their own residents. Across nations, we find that countries that put higher welfare weights on the welfare of foreigners also tend to receive higher weights from them, consistent with a general form of reciprocity among nations. Using our estimated welfare weights, we provide a first look at what countries stand to lose, or gain, from the dissolution of the world trading system as we know it. |
| JEL: | F1 F13 F14 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34658 |
| By: | Gita Gopinath; Brent Neiman |
| Abstract: | In 2025, statutory tariff rates on U.S. imports rose to levels not seen in over one hundred years. What are the implications for prices? On the one hand, shipping lags, exemptions, and enforcement gaps have kept the actual implemented rates at only half of the statutory rates, moderating the tariffs’ impact. On the other hand, tariff pass-through to U.S. import prices is almost 100 percent, so the United States is bearing a large share of the costs. We study the incidence of the 2018-2019 and 2025 U.S. tariffs and discuss implications for U.S. sourcing, domestic manufacturing costs, and the dollar. |
| JEL: | F1 F3 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34620 |
| By: | Laurens, Noémie |
| Abstract: | Critical minerals (CMs) have become a strategic priority for the European Union (EU) amid the green and digital transitions. These resources - including lithium, cobalt, rare earths and nickel - are essential for clean energy technologies, defence systems and electronics. Yet, their processing and refining are highly concentrated in a few countries, leaving the EU especially vulnerable to supply disruptions and fuelling geopolitical tensions. Recent shocks, including the COVID-19 pandemic and the war in Ukraine, have further exposed the fragility of supply chains. At the same time, extracting and trading CMs pose severe environmental and social challenges, from high carbon footprints to local community impacts. EU trade policy is therefore confronted with a trilemma: how to safeguard economic competitiveness, ensure environmental sustainability and enhance security of supply. This policy brief summarises research tracing how the European Commission's trade discourse on CMs has evolved to address the trilemma (Laurens, 2025). Initially, communications focused narrowly on free trade and market access for raw materials. Gradually, sustainability and security considerations entered the narrative. Most recently, the EU has embraced a hybrid framing, simultaneously highlighting economic, environmental and security objectives in its trade discourse on CMs. Although this hybrid discursive approach can help build broader support for CM policies and agreements by appealing to diverse stakeholders, it also demands careful policy design to minimise trade-offs and deliver on its promises. Without credible implementation and genuine integration of economic, environmental and security objectives, hybrid framing risks remaining largely rhetorical and failing to steer policy in practice. Key policy messages: The EU should adopt an integrated approach that effectively addresses economic, sustainability and security goals together while anticipating trade-offs to support more robust CM policies. This requires strong coordination across trade, industry, environment and security-related directorates-general to align CM strategies, avoid policy conflicts and maximise synergies. It may also require short-term economic sacrifices for long-term resilience. Early and meaningful engagement with research institutions, civil society, local communities and industry should move beyond formal consultation and enable genuine co-creation of solutions. Dialogue should begin before key decisions on CMs are finalised, incorporate stakeholder input transparently, and respond to concerns about sustainability and security of supply. CM policies and agreements should provide for binding obligations and concrete implementation plans to ensure environmental and labour protection, local value addition, skills development and technology transfer in resource-rich but economically vulnerable regions. Listening to partner governments and local communities as well as investing in the knowledge of local political, social and environmental contexts are essential for building trust and long-term partnerships. International cooperation on CMs should be strengthened through inclusive arrangements that involve both major consumers and producing countries. Clubs composed primarily of resource-poor but wealthy economies risk being perceived as exclusionary. |
| Keywords: | competitiveness, critical minerals, discourse analysis, European Commission, framing, geopolitics, green transition, security, sustainability, trade |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:idospb:334560 |
| By: | Federico Di Pace; Giacomo Mangiante; Riccardo Masolo (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore) |
| Abstract: | We employ Synthetic Control Method techniques to estimate the causal effect of Brexit on the consumer price index (CPI) in the United Kingdom. We construct a counterfactual CPI index from a weighted pool of comparable economies and find that the price level of the United Kingdom rose approximately 7 percentage points more than its synthetic counterpart, between 2016Q2 and 2024Q4. This accounts for over a quarter of total inflation during the period. We attribute about 2 percentage points of this increase to the depreciation of the British pound after the Referendum and the remaining 5 percentage points to the change in trading relationships that ensued the 2021 Trade and Cooperation Agreement. |
| Keywords: | Brexit, Exchange Rate, Trade Barriers and Consumer Prices. |
| JEL: | C32 E31 F13 G10 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:ctc:serie1:def147 |