|
on International Trade |
|
Issue of 2026–10–26
seventeen papers chosen by Nicola Daniele Coniglio, Università degli Studi di Bari “Aldo Moro” |
| By: | Jingting Fan; Kyle Handley; Nuno Limão |
| Abstract: | Export controls restrict trade to limit adversaries’ access to goods that contribute to military capability, but their effectiveness depends on how trade and production adjust across countries. We combine new data on U.S. export control classifications and licensing outcomes with a quantitative general equilibrium model featuring dual-use production, input-output linkages, and separate civilian and military final expenditure. We estimate large export and entry frictions from these controls. These effects are substantially smaller for U.S. exports to members of multilateral export control regimes (MECRs): the differential is equivalent to an export cost of 15 to 29 log points. Relative to a counterfactual without differential controls on adversaries, multilateral controls reduce their imports of controlled products far more than unilateral U.S. controls. Only 7% of the reduction in controlled exports under the multilateral regime is replaced by other countries, compared with 28% under unilateral U.S. policy. Multilateral controls reduce adversaries’ real military expenditure by increasing their military price index. The security impact, measured as U.S. real military expenditure relative to adversaries, rises by about 1 log point under multilateral controls but only 0.14 log points under unilateral controls, with both imposing a similar civilian real cost. Even a U.S. embargo fails to reproduce the multilateral security outcome. |
| JEL: | F12 F13 F14 F52 H56 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35898 |
| By: | Nicolas Dietl; Susanne Keller; Sebastian Krautheim |
| Abstract: | Geopolitical tensions threaten to fragment the global economy into rival blocs. As a driver of this fragmentation, we propose a demand-side channel grounded in social identity theory: consumers value goods partly by the political and economic values embodied in their origin. We embed this in a trade model with two countries that are similar in terms of political values and one dissimilar country, with the US, the EU and China as our benchmark example. We show that a geopolitical shock raising the salience of political over economic values diverts trade toward the similar pair and can also make a previously unattractive standards-harmonization agreement between them mutually beneficial. A subsequent estrangement of the similar pair, through diverging political values or trade-war measures, can reverse both effects and push the world economy from two blocs toward three. We also apply the framework to an estrangement of the US from the EU and Canada. Both a US divergence in political values and trade-war measures divert trade toward the EU-Canada pair, but only the former can make a previously unattractive EU-Canada agreement mutually beneficial. |
| Keywords: | globalization backlash, friend-shoring, geopolitics, social identity, identity politics, trade agreements, TTIP, value-based trade |
| JEL: | F02 F13 F15 F50 D91 Z13 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_13053 |
| By: | Oscar Perelló |
| Abstract: | I study the role of trade intermediaries in mitigating supply chain risk. Chilean intermediated imports rise and fewer firms import directly when origin-product risk increases. Firm-to-firm transactions reveal that intermediaries maintain larger and more stable supplier networks, while only larger producers diversify suppliers. I rationalize firms’ sourcing strategies in a model with matching costs and insecure supplier links. Intermediation lowers expected input costs despite brokerage fees, allowing producers to secure inputs without diversifying themselves. A 10 percent increase in global risk lowers operating profits by 3.5 percent and raises consumer prices by 0.9 percent. These losses nearly double without intermediation. |
| Keywords: | supply chain risk, trade intermediaries, global value chains |
| JEL: | F12 F14 L14 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_13046 |
| By: | Xing, H.; Pollitt, M. G. |
| Abstract: | European carbon border adjustment mechanisms (CBAMs) leave most of the quantified emissions embodied in imports outside their present boundaries. Applying EU and UK statutory schedules to fixed 2025 trade, we estimate coverage of 31.0% and 26.9% of the respective Global product accounts, with still lower shares for imports from China. Adding electricity within goods already listed closes only a minority of the gap. The larger additions come from wider product coverage. In an illustrative passenger car, cove red materials and production electricity account for 49.8% of quantified production emissions, although the finished vehicle falls outside the current schedules. Across trade, vehicles, machinery and photovoltaic products are major downstream carriers, while chemicals, petroleum products and textiles dominate the residual. These findings identify two distinct policy tasks. Effective origin carbon prices can pass through domestic materials and electricity into downstream exports, creating a basis for selective climate-club recognition. Residual industries outside carbon pricing require broader emissions trading system coverage. We suggest that EU and UK authorities should signal a longer-term direction for possible CBAM expansion across products and sectors, alongside principles for recognizing carbon costs paid in origin countries. This would not commit either authority to immediate expansion. But it could encourage stronger and broader carbon pricing in origin countries while the technical requirements for any future expansion are still being developed. |
| Keywords: | Carbon Border Adjustment Mechanism, EU ETS, CN ETS, UK ETS |
| JEL: | Q51 |
| Date: | 2026–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2679 |
| By: | Harald Oberhofer (Department of Economics, Vienna University of Economics and Business); Zhenyi Wang (Department of Economics, Vienna University of Economics and Business) |
| Abstract: | This paper quantifies how the construction of trade data shapes trade policy estimates in structural gravity models. Using 14 widely employed trade datasets and alternative sample restrictions, we generate 643 estimates of the EU membership trade effect from a standard structural gravity specification. We then use these estimates in a meta-regression framework to identify how data and sample choices contribute to variation in the estimates. In a Shapley decomposition, the choices explain 69.1% of the variation, with the selection of a trade dataset alone accounting for 39.4% of the explained variation. We further distinguish between decisions that affect the measurement of a common estimand and those that alter the underlying economic margin. Including domestic trade flows increases the estimated EU membership effect by 21.2 percentage points on average and nearly doubles the implied expenditure-weighted welfare gain in a four-sector general equilibrium model. Finally, we relate differences in data generating processes across datasets to estimated trade effects, showing that trade data construction is a first-order determinant of structural gravity results. This implies that conclusions from gravity based policy evaluations are sensitive to data choices and require explicit consideration of data construction as part of the empirical identification. |
| Keywords: | Trade policy estimates, Data construction, EU membership trade effect, Welfare implication |
| JEL: | F13 F14 F15 C81 C83 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp398 |
| By: | Christopher Clayton; Antonio Coppola; Vanessa Hu; Matteo Maggiori; Jesse Schreger; Serdil Tinda |
| Abstract: | The increasing use of geoeconomic pressure is reshaping the global economy. We introduce a methodology using large language models (LLMs) to systematically measure the application of and response to geoeconomic pressure from large textual corpora, classifying which governments apply pressure to which foreign targets, using which in struments, firms, and products. Most importantly, we use LLMs to analyze how and why firms respond to the pressure. We focus on export controls, sanctions, and tariffs as the main instruments of pressure on firms. We find that export controls induce the targeted firms to undertake domestic R&D to build a domestic alternative technology. Western sanctions on Russia cause supply chain re-arrangements, the major beneficiary of which are firms in third-party countries, like China and India, which step into the market vacuum created by the broken business relationships. The threat and impositions of U.S. tariffs cause losses for the majority of U.S. firms, which report absorbing the cost shock on their inputs via their profit margin. Foreign firms are also negatively affected, mostly via the related macroeconomic uncertainty and the cost of relocating production. |
| Keywords: | artificial intelligence, LLMs, economic coercion, economic security, economic statecraft, economic dependency, chokepoints, sanctions, export controls, tariffs |
| JEL: | C4 F3 F4 F5 G3 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1386 |
| By: | Rabah Arezki; Olof Löf; Federico Merchan; Frederick van der Ploeg |
| Abstract: | This paper explores the effect of export restrictions on critical minerals on foreign investment in exploration, the upstream activity that determines the future resource base. Using a three-way panel of countries, minerals and years that combines the OECD inventory of export restrictions on critical raw materials with S&P Global exploration budgets over the period 2009 to 2024, and a local-projections difference-in-differences estimator that accommodates the staggered adoption of restrictions, we find that the introduction of an export restriction has a statistically and economically significant negative effect on foreign exploration investment: about US$11 million (constant dollars) per country-mineral pair per year, or roughly 9% of the cost of exploring and developing a typical gold project. The effect is asymmetric, as removing a restriction does not restore investment. Outright export bans drive the result, whereas export taxes and quotas have no discernible effect on foreign exploration. The key results are driven by countries with weaker control of corruption, suggesting that the signalling effect of trade restrictions is pervasive when there is poor policy credibility. Finally, we verify that restrictions bind in practice: export values fall by about 15% after a restriction is introduced, with the largest declines for bans and quotas. |
| Keywords: | critical minerals, export restrictions, export bans, foreign exploration investment, endogenous resources, resource nationalism, corruption |
| JEL: | F13 F14 O13 Q31 Q32 Q38 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_13054 |
| By: | Santana, Roy; Tibuleac, Daniela |
| Abstract: | This paper examines how trade concern discussions in the WTO Committee on Market Access (CMA) have evolved over three decades. It studies 138 CMA trade concerns discussed between 1995 and 2025, using the WTO Trade Concerns Database, official WTO records, and statement-level text from CMA minutes. It analyses both the substance of the issues raised and the recorded form of Members' interventions, and uses related CTG minutes to examine whether CMA concerns and language also appear in the broader Goods Council. The paper documents a marked increase in the number of trade concerns, statements, and volume of recorded text, especially since the mid-2010s and more visibly after 2020. It shows that the CMA agenda has broadened beyond tariffs, taxation, quantitative restrictions, and licensing to include a wider set of non-tariff, regulatory, and administrative measures affecting trade in goods, some of which overlap with the work of other WTO bodies. The textual analysis, based on word counts, Jaccard n-gram similarity, and TF-IDF cosine similarity, shows that CMA statements have become longer and more repetitive, mainly through paraphrased reuse rather than near-verbatim copying. It also finds substantial overlap between CMA and CTG discussions, suggesting that some concerns acquire cross-body visibility not only as agenda items, but also through the framing used by Members. Exploratory analysis indicates that repetition is associated particularly with concern maturity and institutional diffusion, while issue type plays a weaker role. The findings provide a descriptive empirical perspective on how WTO Members use regular bodies to record, revisit, and transmit trade concerns before, alongside, or instead of formal dispute settlement under the Dispute Settlement Understanding (DSU). |
| Keywords: | Economic cooperation, Committee on Market Access, trade concerns, specific trade concerns (STCs), trade frictions, transparency, development, trade diplomacy, WTO governance |
| JEL: | F13 F53 F55 K33 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:wtowps:344112 |
| By: | Amah-Tchoutchoui, Gregorio; Friedrichs, Maja; Mau, Karsten (RS: GSBE other - not theme-related research, Macro, International & Labour Economics); Polianski, Alexei |
| Abstract: | This paper documents the construction of PESCA-NL (Pathfinder for External Supply Chain Analyses of the Netherlands), a dataset and online dashboard on the external supply-chain dependencies of Dutch trade. It combines harmonized bilateral trade statistics for 2017-2023, where re-exports are systematically separated from domestic exports, with an input-output mapping inferred from confidential Dutch firm-level microdata, and enriches these building blocks with product-level and partner-country indicators covering supplier concentration, relationship stickiness, governance, geopolitical alignment, logistics, and environmental risk. A composite input-supply risk index condenses the underlying dimensions into a single score, while all sub-indicators remain accessible. |
| Keywords: | international trade, supply chains, external dependencies, NETHERLANDS, data, DASHBOARD |
| JEL: | F14 F52 L14 |
| Date: | 2026–10–08 |
| URL: | https://d.repec.org/n?u=RePEc:unm:umagsb:2026009 |
| By: | Omar Barbiero; Alvaro Silva; Hillary Stein |
| Abstract: | We develop a multisector open-economy model that maps border price shocks into US producer and consumer prices through imported inputs, domestic production networks, and competition with foreign suppliers. The framework, which we apply to the 2025 US tariffs, accommodates pass-through in either levels or logs and maps directly to public data on input–output linkages, trade, and prices. Allowing firms to respond to the prices of competing imported varieties substantially improves the model’s fit to producer prices, and the resulting model is also consistent with the consumer-price response. Aggregating the estimated price effects across the full consumption basket, the February–October 2025 tariff increases imply a first-order contribution of 0.91 percentage points to headline PCE inflation, including 0.10 percentage points from the foreign competition channel. |
| Keywords: | tariffs; inflation; import prices; indirect imports |
| JEL: | E31 E65 F40 |
| Date: | 2026–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedbwp:103943 |
| By: | Cuong Le Van (FTU - Foreign Trade University, Hanoi, Vietnam, IPAG Business School); Duc V. Le (UP1 - Université Paris 1 Panthéon-Sorbonne); Thanh Tam Nguyen-Huu (Métis Lab EM Normandie - EM Normandie - École de Management de Normandie = EM Normandie Business School) |
| Abstract: | This paper examines how a developing country can benefit from trade liberalization. We develop a two-period model, comprising an autarky phase and a globalization phase, and a two-country framework, featuring a developing country and a developed country (representing the rest of the world). Our findings indicate that globalization may disadvantage a developing country when its total factor productivity (TFP) is significantly lower than that of the developed country. However, we demonstrate that the developing country can still achieve gains from trade openness by allocating part of its capital to innovation during the autarky period, thereby enhancing its TFP. |
| Keywords: | Gain, Investment in innovation, TFP, Globalization |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05799799 |
| By: | Artuc, Erhan; Barattieri, Alessandro; Noukwe, Isambert Leunga; Mattoo, Aaditya |
| Abstract: | Three key developments, protectionism, aging, and automation, are affecting the global pattern of industrial production and trade. While these trends affect many countries, they are especially consequential for China, which currently dominates global manufacturing. Using a multi-country model fitted with global trade and robotization data, this paper shows that automation can mitigate the adverse effects of protection and aging on competitiveness, particularly in sectors with a high share of automatable tasks. The impact of a 10 percent decline in labor force in China would be offset by doubling of robot productivity in vehicles, but robot productivity would need to more than triple in computers. |
| Date: | 2026–09–28 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11468 |
| By: | Jonathan Vogel |
| Abstract: | Gains from trade are typically calculated using a constant trade elasticity estimated from substitution across foreign countries. For general homothetic preferences, we show how to calculate these gains from the initial domestic expenditure share and the home-foreign elasticity function along a price path to autarky. While this function generally depends on the specific price path, under weak separability it does not. We provide conditions for its nonparametric identification and estimate sector-level elasticity functions using tariff changes implied by trade agreements. Across WIOD and OECD ICIO data, estimated home-foreign elasticities generally rise with domestic expenditure shares. Using estimated elasticity functions in a multi-sector model with intermediate inputs, the median gain across the WIOD countries is 19.37 log points, compared with 24.43 when each country-sector elasticity is held fixed at its initial value. |
| JEL: | F1 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35906 |
| By: | Nicholas R. Lardy (Peterson Institute for International Economics) |
| Abstract: | The differing findings of the OECD and IMF studies highlight the challenges of accurately measuring Chinese industrial subsidies, making the estimates unreliable for shaping trade policy. Policymakers should avoid using disputed figures to justify protectionism. Greater data transparency and clearer explanations for discrepancies between estimates are essential to help policymakers formulate effective trade policies. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:iie:pbrief:pb26-16 |
| By: | Minnich, John |
| Abstract: | This article examines China’s efforts to accelerate its economic rise using technology absorption policies, or measures that condition foreign market access on technology transfers to domestic firms. I argue bureaucratic fragmentation and China’s position in global value chains (GVCs) constrain its bargaining power over foreign investors, limiting the use of tech absorption policies even in highly strategic industries such as semiconductors. Case studies and analysis of a new industry-level dataset from 1995-2015 suggest centralizing reforms facilitated increased use of tech absorption policies in strategic industries over time. However, China’s reliance on foreign firms to drive export growth and associated employment undercuts tech absorption efforts in strategic industries in which it occupies an intermediate position in GVCs. My findings show how regulatory institutions and GVCs shape the political economy of bargaining over technology transfer between states and firms, and how position in production networks influences the strategic choices behind China’s rise. |
| Keywords: | rise of China;technology transfer;global value chains;foreign direct investment |
| JEL: | O33 F23 P26 |
| Date: | 2026–10–07 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:129489 |
| By: | Charles Yuji Horioka; Nicholas Ford |
| Abstract: | President Trump’s tariffs have revitalized the debate about the causes and consequences of the US trade deficit. In this paper, we put forward a theoretical model that contributes to this discussion. In autarky, countries with low saving rates will have lower capital stock to GDP ratios and a higher marginal product of capital than countries with high saving rates; consequently, investment opportunities in the low saving rate countries will tend to offer higher returns. When such countries interact and when there are no financial market imperfections or barriers, our model predicts that a low saving rate country will initially have a trade deficit and that the high saving rate country will have a trade surplus as a way of transferring real capital to where its marginal product is higher. These transfers of capital will eventually cause rates of return on capital to converge and trade imbalances to decline and to eventually reverse themselves. However, because trade imbalances are small compared to capital stocks, this process may take many decades, as a result of which trade imbalances may persist for some time. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:dpr:wpaper:1300r |
| By: | Jan Morgan; Anchi Xia |
| Abstract: | We provide a theory of optimal trade sanctions with three strategic players: Home (sanctioner), Foreign (target), and Bystander. Bystander may act unilaterally or ally with either party subject to a participation constraint. We derive three novel results. First, members of a coalition generically set different tariffs either under Stackelberg timing or when transfers are imperfect. Second, as sanctions tighten, Home's welfare can improve even beyond the unilateral terms-of-trade optimum due to strategic interactions. Third, we characterize feasible sanctions targets when Home and Foreign compete for Bystander's support. An alternative implementation arises with competition: Home lets Foreign win, but Foreign's transfer to Bystander implements the sanctions target. We apply our model to sanctions against Russian crude. In a calibration exercise, cooperation among India, China, and Russia best matches observed data. Sanctions could have been roughly 70% more effective had China and India acted unilaterally or had the sanctioning coalition made them a better offer. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.22830 |