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on International Trade |
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Issue of 2025–10–20
twelve papers chosen by Nicola Daniele Coniglio, Università degli Studi di Bari “Aldo Moro” |
| By: | Anh D. Do; Sharat Ganapati; Woan Foong Wong; Oren Ziv |
| Abstract: | The majority of global trade moves by sea through hub-and-spoke shipping networks. We investigate the returns to being a hub country by analyzing how transshipment activity shapes trade and supply chains. We show that most US imports---especially from smaller origin countries---are transshipped via key hubs, and transshipment is positively correlated with the hub's product-level trade. Leveraging the indirect shipping network structure to construct an instrument, we find that transshipment increases hubs' imports from origins for which they facilitate trade and exports of downstream goods, highlighting their central role in shaping modern global trade and supply chain dynamics. |
| JEL: | F10 F13 F14 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34361 |
| By: | Konstantin Egorov; Vasily Korovkin; Alexey Makarin; Dzhamilya Nigmatulina |
| Abstract: | How effective are trade sanctions? We examine the economic impact of the unprecedented sanc- tions imposed on Russia following February 2022, when Western countries banned exports ac- counting for 36% of Russia’s prewar import value. Combining novel, manually collected records of these sanctions with Russian customs data, firm balance sheets, domestic railway shipments, and government procurement contracts, we provide the most comprehensive analysis of the economic impact of trade sanctions on a target country to date. Using a difference-in-differences approach, we find that imports of sanctioned country-product varieties into Russia saw a sharp 62% decline following the war’s onset. While we see substantial rerouting through third countries, it did not fully offset the direct import losses: total imports of sanctioned products fell by 27%. Firms that had relied on soon-to-be-sanctioned imports experienced a 14% decline in output, also observed in manufacturing, technology, and firms linked to military supply chains. Affected firms also saw reduced government procurement sales and incurred additional losses when their buyers or suppliers were exposed to sanctions. Overall, our findings suggest that, contrary to widespread claims of ineffectiveness, import sanctions on Russia had far-reaching adverse effects. |
| Keywords: | sanctions, international trade, Russia-Ukraine war, geoeconomics |
| JEL: | D22 D74 F14 F51 H56 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:upf:upfgen:1920 |
| By: | Pierre Cotterlaz; Guillaume Gaulier; Aude Sztulman; Deniz Ünal |
| Abstract: | The intensity of global value chains can be proxied by the share of intermediate goods in world trade. This indicator is however affected by price effects, which were particularly strong during the recent inflation episode of the early 2020s. To neutralize these price effects, we compute price deflators by production stage, obtaining series of trade in volume. The deflated series reveal that the share of intermediate goods in world trade is relatively stable since the early 2000s. If anything, trade in parts and components, a key feature of global value chains, seems slightly more dynamic than other production stages. Our results further show that parts and components, as well as capital goods, experienced the fastest trend growth between 2000 and 2023, while primary goods lagged behind. Finally, trade volumes appear strongly procyclical overall, except for primary goods, which display no significant correlation with the global output gap. |
| Keywords: | Globalization;Global value chains;International Trade in Volume;Intermediate goods;Production stages;Parts and components |
| JEL: | F14 F15 L60 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:cii:cepidt:2025-14 |
| By: | Yan Bai; Dan Lu; Hanxi Wang |
| Abstract: | We derive optimal trade policies in a multi-country, multi-sector general-equilibrium model that unifies a wide range of supply-side assumptions. Under our CES supply system, which nests most existing specifications, two-country optimal tariffs and export taxes across sectors depend only on elasticity parameters and relative market shares. With multiple countries, country and sector interdependencies—due to the cross-country trade network—make optimal tariffs imposed by the home country differ across countries and sectors while converging within sectors. Only when foreign countries do not trade with each other do the home country’s optimal policies depend solely on bilateral trade. Using trade data, we quantify optimal policies and find that ignoring interdependencies can lead to substantially lower welfare gains for the home country. |
| JEL: | F13 F14 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34358 |
| By: | Matthew Higgins; Thomas Klitgaard |
| Abstract: | U.S. trade policy remains in flux. Nevertheless, important elements of the new policy regime are apparent in data through July. What stands out are the large differences in realized tariff rates by trading partner, ranging from less than 5 percent for Canada and Mexico to 15 percent for Japan and to 40 percent for China. This post shows that the bulk of cross-country differences in tariff rates is explained by two factors: the U.S.-Canada-Mexico free trade agreement and differing sales shares in tariff-exempt categories. |
| Keywords: | tariffs; trade policy; international trade |
| JEL: | F13 |
| Date: | 2025–10–06 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednls:101923 |
| By: | Nicolás de Roux (Universidad de los Andes); Luis R. Martínez (Emory University); Camilo Tovar (International Monetary Fund); Jorge Tovar (Universidad de los Andes) |
| Abstract: | How do exporting firms navigate the loss of a major foreign market? This study examines the response of Colombian manufacturing firms to the collapse of trade with Venezuela, Colombia’s second largest trade partner. Trade disruptions began in 2009 when Venezuela restricted imports from Colombia and worsened with Venezuela’s protracted economic crisis after 2014, leading to a fall in trade of more than 90% by 2018. Using transaction-level customs data linked at the firm level to the Colombian manufacturing census, we use a difference-in-difference design based on previous exports to Venezuela to estimate the effect of the loss of this market on firm performance over a ten-year period. Our analysis yields four main findings: (i) affected firms experience a sharp and persistent decline in exports; (ii) while they survive, these firms significantly reduce their scale, lowering production, input use, investment, employment, and wages; (iii) however, traditional measures of total factor productivity remain unchanged, suggesting that firms retain their technical capabilities; (iv) affected firms adapt by increasing exports to familiar markets but fail to expand into new markets or boost domestic sales. These results highlight the resilience of exporting firms but also underscore the persistent difficulties in substituting a major trade partner. |
| Keywords: | Exports, Firm Performance, Manufacturing, Trade Collapse, Total Factor Productivity |
| JEL: | F13 F14 F61 O12 D22 D24 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:col:000089:021687 |
| By: | Nagengast, Arne J.; Rios-Avila, Fernando; Yotov, Yoto |
| Abstract: | We use heterogeneity-robust difference-in-differences (DiD) methods to evaluate the impact of membership in the European Union (EU) Single Market on international trade. On the policy front, we provide evidence that: (i) On average, the EU has been very effective in promoting trade among its member states; (ii) The trade effects of the EU have been long-lasting, but heterogeneous across EU cohorts; and (iii) While the EU has benefited both 'old' and 'new' members, the increase in the exports from the 'old' members to the 'new' joiners has been disproportionately larger. From a methods and practical perspective, the contribution of this paper is to introduce a new, fast, and flexible estimation command that combines leading estimation techniques from the gravity literature with recent methods from the heterogeneity-robust DiD literature. |
| Keywords: | EU membership, Staggered Difference-in-Differences, Gravity Model, Estimation Command |
| JEL: | C13 C23 F10 F13 F14 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bubdps:328249 |
| By: | Konrad Adler (University of St. Gallen - School of Finance; Swiss Finance Institute); JaeBin Ahn (International Monetary Fund (IMF)); Mai Dao (International Monetary Fund (IMF)) |
| Abstract: | We study how trade liberalization affects financial and innovation decisions of large firms across major G7 countries. We document how firms increase their cash holdings when their country's trading partners lower their import tariffs, while we find no effect of a decrease in the country's own import tariffs. Specifically, we find that the increase in cash holdings occurs before tariff cuts by trading partners and is associated with higher R&D spending and patent filing after the cuts. Our results are consistent with the predictions of a model in which higher expected returns to innovation from enhanced export market access lead to higher cash buffers. |
| Keywords: | Trade, MFN tariff, Cash Holdings, R&D, Patents |
| JEL: | F12 G31 O32 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:chf:rpseri:rp2571 |
| By: | Jake Bradley; Junggie Lee |
| Abstract: | This paper studies the heterogeneous distributional effects of trade liberalization. We develop a tractable heterogeneous agent general equilibrium model in which individuals differ by income, wealth, age, and employment status, while firms endogenously evolve in productivity following a stochastic process with fixed export costs. In the model, trade openness raises the return to labor and deepens the capital stock, lowering returns on assets. These shifts generate systematic differences in preferences over trade: workers whose income relies primarily on labor gain from openness, while retirees and asset-dependent households may lose. Using microdata from the Brexit referendum in the United Kingdom, we document empirical patterns consistent with the model’s predictions: individuals with higher labor income shares were significantly less likely to support leaving the European Union. By linking micro-level heterogeneity to macro-level trade outcomes, the model offers a useful tool for evaluating the political economy and welfare consequences of globalization. |
| Keywords: | Trade gains; Heterogeneous agent; Perpetual youth; Life-cycle |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:not:notcfc:2025/02 |
| By: | Alex Imas; Kristóf Madarász; Heather Sarsons |
| Abstract: | This paper presents a new framework for understanding economic nationalism based on an empirically-validated desire for dominance, which generates a preference for exclusionary policies. We incorporate such preferences into a model of international trade. The model predicts that exclusionary preferences lead people to favor tariffs and protectionist policies that harm both their trading partner's and their own consumption. This implies that higher prices caused by exclusionary policies like tariffs will be more acceptable than those caused by non-exclusionary policies. We provide support for these predictions through two survey experiments, which also account for the role of cognitive biases and misinformation. |
| JEL: | D9 P00 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34351 |
| By: | McGuirk, Eoin; Trebesch, Christoph |
| Abstract: | We examine the intersection of two subfields within political economy: geoeconomics and conflict. Geoeconomics is primarily concerned with the use of "economic weapons " of coercion, while the conflict literature mainly focuses on military weapons and war. We propose bridging these two approaches, focusing on the international dimension of conflict. We start by reviewing the existing literature linking both fields, in particular research on the relationship between trade and war and on the use of geoeconomic tools such as foreign aid and sanctions. We then highlight four main directions for future research. First, we call for a broader view of the geoeconomic toolkit, as rogue leaders do not limit themselves to economic coercion. In addition to economic weapons, future research should also consider more aggressive -and often costlier - forms of intervention short of war, including sabotage, cyberattacks, covert operations, and the sponsorship of terrorism or insurgency. Second, we require a better understanding of how geoeconomic tools affect the likelihood of conflict. Do sanctions, strategic tariffs, or military aid provoke or deter war? Third, more research is needed on the domestic political economy of geoeconomic actions and their link with conflict. When and why do governments and citizens support the use of economic versus noneconomic weapons? Finally, we stress the importance of research on explicitly peacemaking tools of diplomacy, including mediation, security guarantees, and transparency initiatives. |
| Keywords: | Geoeconomics, conflict, political economy |
| JEL: | F01 F51 F13 F50 D74 H56 N40 F01 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkwp:328237 |
| By: | Dani Rodrik |
| Abstract: | Economics students today learn about mercantilism through Smith’s prism, as a series of logical and policy errors that Smith clarified and settled for good. But far from settled doctrine, mercantilism encapsulated a variety of pragmatic practices that survived Smith’s critique, often to good effect. It found echo in a continuous tradition of what later came to be called “developmentalism, ” running from Alexander Hamilton and Friedrich List’s advocacy of trade protection to Hans Singer and Raul Prebisch’s ideas on import-substitution and, more recently, to East Asian models of export-oriented industrialization. Three of its core tenets hold continued appeal: the primacy of production and jobs (and of their composition) over consumption; preference for close, collaborative relationship between business and government over an arms’ length relationship; and the need for contextual, pragmatic, and often unorthodox policies over universal remedies and “best-practices.” |
| JEL: | B1 F1 O10 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34353 |