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on International Trade |
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Issue of 2026–07–20
twenty-two papers chosen by Nicola Daniele Coniglio, Università degli Studi di Bari “Aldo Moro” |
| By: | Bontu Ankit Patro; Ana Maria Santacreu |
| Abstract: | Trade policy in advanced economies is closely intertwined with concerns about technology and geopolitical rivalry. Using product-level data on export-related trade interventions, we characterize how contemporary export-side interventions are allocated across products, destinations, and bilateral trade relationships. We show that export controls are broad in regulatory scope but economically concentrated on high-value trade flows. Export controls disproportionately target high-technology products and economically important trade relationships, while geopolitical distance shapes their allocation in a nonlinear manner, with the strongest associations for high-technology trade between geopolitical rivals. Finally, a decomposition of targeting patterns shows that modern export controls are organized primarily around products rather than destinations, consistent with a technology-centered regulatory framework. |
| Keywords: | trade policy; geopolitics; export controls; technology; non-tariff barriers |
| JEL: | F13 F14 O33 |
| Date: | 2026–07–14 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedlwp:103525 |
| By: | McCully, Brett; Jaccard, Torsten; Albert, Christoph |
| Abstract: | Who buys imports? By augmenting U.S. grocery purchase data to include origin countries of both products and households, we provide the first evidence that immigrants exhibit substantially stronger preferences for imported consumer goods than natives. We develop and estimate a quantitative trade model to show that immigrants also reduce trade costs and expand the effective market size for foreign goods, thereby increasing local import supply for all households. Overall, however, immigrants generate considerably more local import expenditure via their own purchases than via spillovers to natives, with profound implications for the distributional costs of a negative trade shock, such as an import tariff: the average within-county difference in welfare costs between immigrants and natives is over six times the across-county standard deviation in native household costs. |
| Keywords: | Gains from trade; Heterogenous preferences; Spillover effects; International migration |
| JEL: | F22 J31 J61 R11 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20880 |
| By: | Kalina Manova; Dennis Novy; Aaron Tang; Thomas Sampson; Kalina B. Manova |
| Abstract: | US trade policy in 2025 was unprecedented in the frequency, complexity and volatility of tariff announcements. This paper presents evidence that the resulting policy environment reduced trade flows because of confusion over current tariff levels. We build a new US Tariff Announcement Database for 2025 from US presidential executive orders and proclamations. For each origin country, product and month, we calculate US statutory tariffs and propose novel indicators of tariff confusion: the number of relevant announcements, the number of possible tariff calculations arising, and bounds on possible tariff miscalculation. We show that both tariff increases and tariff confusion reduced US imports during 2025, with confusion more than doubling the impact of tariffs. Moreover, tariff confusion was (i) persistent, and more damaging at higher tariff levels; (ii) mediated through lower import quantities, with little effect on import prices; and (iii) less detrimental for relationship-specific goods and origin countries with stronger trust in foreigners. Our results highlight previously unexplored consequences of the manner in which trade policy changes are implemented. |
| Keywords: | confusion, tariffs, trade policy uncertainty, trade war |
| JEL: | F13 F14 F15 F53 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12787 |
| By: | Borin, Alessandro; Conteduca, Francesco Paolo; Leone, Fabrizio; Mancini, Michele; Zoi, Patrick |
| Abstract: | This paper examines how international trade shocks transmit through domestic supply chains, shaping local economic vulnerabilities. Using detailed firm-to-firm domestic and foreign transaction data, we quantify the direct and indirect exposure of Italian labor markets to two major sources of external risk: imports from China and exports to the United States. We quantify the importance of firms’ domestic and foreign linkages for overall exposure and highlight the critical role of wholesalers and top trading firms within the domestic network in shaping tails risks. Pronounced local disparities in exposure reveal that aggregate trade statistics conceal substantial and uneven regional vulnerabilities. |
| JEL: | F14 R12 L14 F61 R15 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20910 |
| By: | Defever, Fabrice; Ornelas, Emanuel |
| Abstract: | We study how the end of the quota system for textiles and clothing products in the American and European markets on January 1, 2005, affected China’s exports to third countries, where policy was unchanged. Using a difference-in-differences approach, we find that the number of Chinese firms exporting previously restricted products to third countries increased sharply after quota removal. The expansion involved many private firms that exported to neither US-EU markets before nor after 2005. This indicates that the policy shock enhanced China’s role as an export base. Conversely, protectionist shifts in large economies would likely generate sizeable negative third-market effects. |
| Keywords: | Import quotas; China |
| JEL: | F13 F14 D22 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21231 |
| By: | Egger, Peter; Stefanova, Stefani; Suverato, Davide |
| Abstract: | We propose a new quantitative trade model in which consumers value quality and monopolistically competitive firms charge variable markups and allocate skill-specific labor between production and quality-upgrading innovation. Building on existing literature that documents frictions in the assessment of imported goods' quality, we model these as non-ad-valorem trade barriers that distort incentives for quality upgrading and find strong evidence of this mechanism in the model's structural estimation. Quantifying the multi-country, multi-sector, general-equilibrium model for 26 European economies, we compare counterfactual increases in ad-valorem and non-ad-valorem trade barriers and assess their effects on selection, efficiency, quality, skill premium, and welfare. |
| Keywords: | Quantitative trade models; Quality; Variable markups; Skill premium |
| JEL: | F12 F14 O14 O31 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20851 |
| By: | Yan MA; Morihiro YOMOGIDA |
| Abstract: | We study whether carbon tariffs can prevent emissions leakage which occurs when firms relocate production across countries. We extend a segmented market model of international trade to a North-South setting with polluting firms. A northern firm may relocate its plant to the South to avoid the higher carbon costs imposed on its domestic production relative to those on its offshored production. To prevent emissions leakage through the firm's relocation, the North can adopt a carbon tariff and an export rebate that can offset its gap in carbon taxes with the South. We find that the North’s carbon tariff and export rebate prevent emissions leakage, which causes an increase in global emissions, if the northern firm uses less emissions-intensive technology relative to the southern firm and its emissions intensity exceeds fifty percent of that of the southern firm. However, if the northern firm’s emissions intensity is less than fifty percent of that of the southern firm, the North’s carbon tariff fails to prevent emissions leakage even with its export rebate. We also find that the North’s optimal carbon tax regime includes its carbon tariff and export rebate. Furthermore, we show that the North's optimal carbon tax regime actually benefits the South through a reduction in global emissions. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:26053 |
| By: | Benny Kleinman; Ernest Liu; Stephen J. Redding; David Xu |
| Abstract: | We develop a tractable quantitative model of international trade in which agents make bilateral investments in resilience under general equilibrium uncertainty. Under both complete and incomplete financial markets, we show that these bilateral investments solve a portfolio problem of choosing trade partners. Countries' risk profiles become determinants of trade flows, income and welfare, whose first moments are affected by the second moments of productivity and trade costs. Changes in global economic uncertainty have heterogeneous effects across countries, depending on how they affect real hedging opportunities. The opening of trade can raise or reduce income volatility, but is revealed-preferred to autarky. |
| JEL: | F10 F14 F50 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35416 |
| By: | Ottaviano, Gianmarco |
| Abstract: | This paper studies how digital infrastructure is associated with the spatial structure of international trade in goods. We embed data availability into a structural gravity framework, conceptualizing it as an information friction that interacts with geographic distance and equilibrium market access. Using the topology of the global subsea cable network, we construct country-level measures of digital network position. We find that countries with greater digital network embeddedness, particularly on the exporter side, exhibit lower distance elasticities of trade. Other dimensions of digital connectivity are more closely associated with multilateral resistance, highlighting distinct channels through which digital infrastructure affects goods trade. |
| Keywords: | International trade |
| JEL: | R12 D85 F14 R11 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21276 |
| By: | Fornaro, Luca; Wolf, Martin |
| Abstract: | We provide a theory connecting trade policies to innovation and technological hegemony, based on the notion that high-tech clusters generate technological rents for the countries hosting them. We show that tariffs on high-tech imports may be used to steal technological rents from the rest of the world, by redirecting innovation activities from foreign to domestic firms. This strategy may lead to welfare gains, which however come at the expense of even larger welfare losses in the rest of the world. Tariffs may backfire even for the country imposing them if they are not well designed, or if the rest of the world retaliates. |
| JEL: | E22 F12 F13 F42 F43 O24 O33 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20826 |
| By: | Erdal Yalcin |
| Abstract: | Sanctions, export controls, and friend-shoring shift the margin of trade policy from cost alone to exposure. When supplier risks are correlated, the value of a trade relationship cannot be evaluated in isolation; it depends on the sourcing network in which it is embedded. This paper develops a general-equilibrium theory of relationship-based trade under correlated risk. Countries allocate sourcing across partners whose risks load on common factors, while terms of trade clear markets and scale the uninsured covariance carried by each relationship. The mechanism separates individually optimal de-risking from collective resilience. Reallocation away from a risky supplier raises demand for substitutes; if capacity is scarce, or if substitutes load on the same systemic factor, equilibrium prices can erode, and even reverse, the risk reduction the reallocation was meant to achieve. The model yields a risk-augmented Viner decomposition into trade creation, terms-of-trade redistribution, and induced risk. Quantitatively, this induced-risk channel is small with broad re-sourcing and abundant substitutes, but first-order for critical inputs and high-loading supplier clusters. |
| Keywords: | geopolitical risk, friend-shoring, de-risking, supply chain resilience, trade networks, terms of trade |
| JEL: | F13 F15 F42 D52 D81 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12797 |
| By: | Adolph, Jonas; Kohler, Wilhelm; Müller, Gernot |
| Abstract: | We develop a simple model that jointly determines the level of trade and the extent of trade-disruption risk associated with geopolitical conflict. Any pair of countries is likely to settle into one of two steady states: (i) a low level of trade coupled with high trade-disruption risk, or (ii) a high level of trade coupled with low trade-disruption risk. Intermediate cases are unstable. Examining bilateral trade flows between 1966 and 2015, we find, first, that the extent of trade varies systematically with trade-disruption risk and, second, that trade between country pairs tends to converge over time toward these polar cases. |
| Keywords: | Sourcing |
| JEL: | F13 F14 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20885 |
| By: | Gersbach, Hans; Maunoir, Paul Maxence; Walsh, Kieran James |
| Abstract: | What is the economic value of a country to others through trade, relative to the gains it secures for itself? To answer this question, we introduce, characterize, and compute the trade benefit ratio (TBR) – a new metric capturing the ratio of value created for trading partners to that created domestically. TBR also reflects a country’s capacity to impose harm on others relative to self-harm, positioning it as a potential measure of geopolitical leverage. Extending a nonlinear quantitative general equilibrium model spanning 34 countries/regions and 38 industries, we compute and rank TBRs for overall trade, manufacturing, and manufacturing plus services. In an all-sectors exercise, the highest-TBR countries are the US, the UK, China, and Indonesia, whereas Japan and South Korea lie at the bottom. In a manufacturing-and-services scenario, the US TBR even exceeds one. We extend the framework to coalitions, demonstrating its relevance in a “Cold War 2.0†scenario of Western-China bloc decoupling. |
| Keywords: | global trade networks; Geoeconomics; value of countries |
| JEL: | C67 D57 F17 F41 F51 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20855 |
| By: | Hausmann, Ricardo; Schetter, Ulrich; Yıldırım, Muhammed A. |
| Abstract: | We analyze the effects of bans on exports at the level of 5, 000 products and show how our results can inform economic sanctions against Russia after its invasion of Ukraine. We begin with characterizing export restrictions imposed by the EU and the US until mid-May 2022. We then propose a theoretically-grounded criterion for targeting export bans at the 6-digit HS level. Our results show that the cost to Russia are highly convex in the market share of the sanctioning parties, i.e., there are large benefits from coordinating export bans among a broad coalition of countries. Applying our results to Russia, we find that sanctions imposed by the EU and the US are not systematically related to our arguments once we condition on Russia’s total imports of a product from participating countries. Quantitative evaluations of the export bans show (i) that they are very effective with the welfare loss typically ∼100 times larger for Russia than for the sanctioners. (ii) Improved coordination of the sanctions and targeting sanctions based on our criterion allows to increase the costs to Russia by about 60% with little to no extra cost to the sanctioners. (iii) There is scope for increasing the cost to Russia further by expanding the set of sanctioned products. |
| Keywords: | Russia; Sanctions; Ukraine |
| JEL: | F13 F51 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21223 |
| By: | Forslid, Rikard |
| Abstract: | Cross-border electricity trade generates classical arbitrage gains but may reduce welfare in small electricity-abundant economies. I develop a two-country general equilibrium model in which electricity is an upstream rent-generating input and manufacturing operates under monopolistic competition and increasing returns to scale. When trade equalizes electricity prices, the smaller economy gains from exports but loses its cost advantage in manufacturing, inducing firms to relocate toward the larger market. The net welfare effect depends on the balance between arbitrage gains and agglomeration losses. Quantitative simulations show that industrial relocation effects dominate across a wide range of parameter values, so that electricity exports are not welfare-improving for the smaller economy. |
| Keywords: | Industrial location; Welfare |
| JEL: | F12 F15 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21329 |
| By: | Razin, Assaf |
| Abstract: | Which income group is pro†globalization or anti†globalization—the wealthy skilled†labor or the poor low†skilled labor? How globalization affect income†based attitudes towards globalization? The paper addresses these issues in the framework of a small open economy which trades in goods and financial securities with the rest of the world. Income†based political cleavages analyzed are grounded on trade†related and macro†related fundamentals, familiar from a standard open†economy model. They are: (i) The degree of trade border frictions, (ii) The degree of international finance frictions, (iii) The relative factor abundance that determines the capital intensity of the country’s exports; And, (iv) The domestic savings and productivity of domestic investment, which determines whether the country is a financial capital exporter or importer. |
| Keywords: | Anti-globalization; Financial globalization |
| JEL: | F00 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20956 |
| By: | Aguilar, Pablo; Darracq Pariès, Matthieu; Dieppe, Alistair; Domínguez-Díaz, Rubén; Gallegos, José-Elías; Quintana, Javier; Eugenelo, Antonio |
| Abstract: | We study the short-run macroeconomic transmission of a US–China tariff war in an open economy multi-sector New Keynesian model with input–output linkages, sectoral nominal rigidities, and heterogeneous currency invoicing. A reciprocal 10 percentage-point tariff increase generates asymmetric incidence: the tariff-imposing country bears more of the inflationary burden, while the targeted country experiences the larger output contraction. Production networks amplify this contraction by propagating the shock beyond the directly tariffed bilateral margin. Currency invoicing further shapes transmission. Under heterogeneous invoicing, dollar-priced border prices weaken the expenditure-switching role of exchange rates, deepening the contraction in China relative to producer-currency pricing and altering third-country spillovers. The EA response is small in the aggregate, but only because positive trade-diversion margins are offset by weaker demand from China and multilateral adjustments. We then exploit the model’s sectoral structure by imposing tariffs on one Chinese sector at a time. Sectoral incidence is highly concentrated, but aggregate effects cannot be inferred from the directly tariffed sector alone: domestic propagation offsets own-sector gains in the US, reinforces own-sector losses in China, and leaves the EA as a net object shaped by opposing trade margins. The results show that tariff incidence depends jointly on where the tariff lands, how the shock propagates through production networks, and how invoicing governs border-price adjustment. A framework that combines these margins delivers a materially different assessment from one built on bilateral trade shares alone. JEL Classification: E31, E32, E52, F13, F41, F42 |
| Keywords: | dominant currency pricing, DSGE, multicountry, networks, tariffs, trade |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20263254 |
| By: | Copestake, Alexander; Firat, Melih; Furceri, Davide; Redl, Chris |
| Abstract: | We estimate the spillovers of demand- and supply-driven shocks in China to foreign countries and firms. We combine a Structural Vector Autoregression (SVAR) framework with a broad-based measure of domestic economic activity in China and narrative evidence on domestic shocks to distinguish supply versus demand components of Chinese growth. We then assess the responses to such shocks of GDP (revenue) in other countries (firms). The results suggest that: (i) global GDP responds more to Chinese supply shocks than to Chinese demand shocks; (ii) both supply and demand slowdowns in China are followed by declines in partner country GDP and firm revenue, especially in countries and firms with stronger trade linkages to China; and (iii) Chinese supply shocks have larger impacts on countries and firms with relatively stronger input linkages to China, while Chinese demand shocks have larger impacts on countries and firms with relatively stronger output linkages to China. |
| Keywords: | Network spillovers |
| JEL: | F14 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21111 |
| By: | Ma, Xiao; Ramondo, Natalia |
| Abstract: | We study how regional specialization patterns and welfare are affected by uncertainty and economies of scale in an open economy. We use a multi-sector spatial equilibrium model with sectoral economies of scale, aggregate uncertainty, and irreversible mobility decisions by heterogenous workers. We analytically characterize the interactions between specialization, economies of scale, and uncertainty. We find empirical support for the model predictions by focusing on the impact of aggregate changes in volatility of sectoral productivity on U.S. regional economies. We calibrate the model using detailed data on U.S. commuting zones and international trade, and extending hat-algebra methods to accommodate uncertainty. Quantitatively, we find that uncertainty shifts employment away from riskier sectors and locations, relative to a deterministic benchmark, lowering the U.S. aggregate gains from trade by at least a third. Some regions, however, lose from trade, an effect mitigated by the presence of economies of scale, and worker heterogeneity. |
| JEL: | F1 F2 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21017 |
| By: | Tarek Alexander Hassan; Thomas M. Mertens; Jingye Wang; Tony Zhang |
| Abstract: | This paper develops a calibrated general-equilibrium model to study how different configurations of trade and financial policy reshape the hierarchy of global currencies—and the U.S. dollar's position at its anchor. Currency safety and anchor status arise endogenously from each economy's 'effective size'—the weight its domestic shocks carry in setting world prices. Tariffs reduce this effective size on the goods side; capital controls do the same on the financial side. A unifying result emerges: The economy that maintains the deepest integration with the global trading network retains the largest safety premium and gains anchor status. We use this framework to evaluate the effects of three policy levers for Europe that affect the effective size of the euro: internal harmonization and enlargement, trade openness, and capital-account openness. The stakes are large: In our model, shifts in currencies' safety can redirect global capital flows and alter sovereign borrowing costs by hundreds of billions of dollars annually. |
| JEL: | F13 F31 F33 F36 F38 F41 G15 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35386 |
| By: | Mayer, Thierry; Mejean, Isabelle; Thoenig, Mathias |
| Abstract: | We use the framework of Mayer, Méjean and Thoenig (2025) to study the geopolitical relationship between Russia and Ukraine. The model embeds diplomacy and war within a quantitative trade framework to estimate: (i) the model-implied probability of conflict over time, and (ii) the impact of different sanction regimes on this probability. We first calibrate the model under a war scenario based on data relevant to the post-February 2022 full-scale conflict, and then add counterfactual sanctions to this scenario. We find that the observed Ukraine’s decoupling from Russia after the 2014 annexation of Crimea reduced its economic exposure to war but also increased the likelihood of a full-scale conflict by lowering its opportunity cost of war. Simulation results show that the 2024 sanction package, if credibly announced in 2021 and made contingent on further aggression, would have significantly raised Russia’s cost of war and could have deterred the 2022 invasion. |
| Keywords: | International trade; interstate conflict; Russia; Ukraine; Geoeconomics |
| JEL: | F1 F5 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21007 |
| By: | Ferrari, Alessandro; Pesaresi, Lorenzo |
| Abstract: | We study how product specialization choices affect supply chain resilience. We propose a theory of supply chain formation in which only compatible inputs can be used in final production. Intermediate producers choose how much to specialize their goods, trading off higher value added against a smaller pool of compatible final producers. Final producers operate complex supply chains, requiring multiple complementary inputs. Specialization choices determine how quickly final producers can replace suppliers after disruptions, and thus supply chain resilience. In equilibrium, production inputs are over-specialized due to a novel network externality. Intermediate producers fail to internalize how their specialization choices affect the likelihood that final producers source all required inputs, and therefore the lost value added from complementary inputs if production halts. As a result, supply chains are more productive in normal times but less resilient than socially desirable. We characterize the optimal transfer that restores the efficient allocation and show that non-fiscal interventions, such as compatibility standards, are generally welfare-enhancing. |
| Keywords: | Supply chains; Specialization; Product design; Resilience |
| JEL: | D21 L14 L22 L23 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21139 |