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on International Trade |
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Issue of 2026–05–25
fifteen papers chosen by Nicola Daniele Coniglio, Università degli Studi di Bari “Aldo Moro” |
| By: | Warren Maruyama (Hogan Lovells); Joseph W. Glauber (International Food Policy Research Institute); Alan Wm. Wolff (Peterson Institute for International Economics); Nicki Ghazarian-Foye (Former Hogan Lovells) |
| Abstract: | US farmers have been among the biggest beneficiaries of US free trade agreements and the postwar creation of a rules-based global trading system. Under recent administrations, however, farmers have been disadvantaged by the US shift away from forging such trade pacts. Agriculture has also been one of the sectors most affected by the volatility and uncertainty of the first and second Trump administrations' high tariffs and trade wars. Both Trump administrations have compensated farmers for lost export revenue, but such a trade policy is not a sustainable long-term solution and cannot replace a more positive policy that improves trade rules and expands farmers' market access abroad. |
| Keywords: | trade, agriculture, retaliation, international trade negotiations |
| JEL: | F51 F53 F13 Q17 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:iie:wpaper:wp26-8 |
| By: | Diego Morales-Burnett; Ricardo M. Reyes-Heroles; Luis Torres |
| Abstract: | A sequence of major economic and geopolitical events has reshaped the structure of global trade in the past decade. It began with U.S. imposition of tariffs on Chinese goods in 2018. The postpandemic followed with widespread disruption to global value chains—the process of manufacturing a product in stages across several countries. |
| Keywords: | Mexico; international economics; trade; manufacturing |
| Date: | 2026–05–12 |
| URL: | https://d.repec.org/n?u=RePEc:fip:d00001:103262 |
| By: | Ali Ozdagli; Maddie Shaheen |
| Abstract: | Our research suggests that if the world becomes increasingly interconnected through international trade, entrepreneurship rates will decrease over time. |
| Keywords: | trade; international economics; labor; entrepreneurship |
| Date: | 2024–08–06 |
| URL: | https://d.repec.org/n?u=RePEc:fip:d00001:98650 |
| By: | Thuy Hang Duong; Weifeng Larry Liu |
| Abstract: | This paper examines the short-run price effects of US tariffs during the Trump administrations. Using a monthly industry-level event-study with staggered treatment timing, we estimate their impacts on domestic producer price inflation across two trade war episodes over 2018-2019 and 2024-2025. The results show that tariffs increased inflation in both episodes, but the magnitude and persistence differed. In 2018-2019, tariffs led to large and sustained price increases, driven by strong cost pass-through from imported intermediate inputs from China. In contrast, in 2024-2025, despite more aggressive tariff measures, inflationary effects were not proportionally larger and dissipated more quickly. This attenuation reflects global supply chain reallocation following the first US-China trade war and the COVID-19 pandemic, as US firms diversified away from Chinese inputs, weakening input-cost transmission. |
| Keywords: | tariffs, inflation, trade war, event-study design |
| JEL: | E31 F13 F14 L11 C23 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:een:camaaa:2026-30 |
| By: | Holger Breinlich; Elsa Leromain; Martina Magli |
| Abstract: | This paper examines how policy-induced supply-chain shocks affect firms' performances, using the UK-EU Trade and Cooperation Agreement (TCA) as a source of exogenous variation. Using UK microdata on firm-level goods and services trade linked to firm's outcomes and employer-employee records, we document a sharp decline in firms’ imports of intermediate goods from the EU after 2021. We then show that firms more exposed to EU input sourcing experience declines in employment and sales, with corresponding effects on workers’ hours and pay. These impacts are heterogeneous across occupations, with larger losses concentrated among lower-skilled roles. Interestingly, we find that firms' services activities play an important role in mediating the impact of GVCs disruptions. On the one hand, these firms experience smaller declines in intermediate inputs imports; on the other hand, they experience stronger negative reactions to the overall GVC shock. |
| Keywords: | GVCs, trade in goods and services, Brexit, TCA |
| JEL: | F13 F14 F16 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12672 |
| By: | Holger Breinlich; Martina Magli |
| Abstract: | Services account for one-third of global trade, yet little is known about the impact of trade restrictions on services trade. To make progress in this area, it is crucial to understand through which modes services are traded (cross-border, consumption abroad, foreign investment or movement of people) and how firms substitute among these modes. We provide novel micro-level evidence on firms' mode choices, combining detailed data on UK firms' trade and affiliates' sales. We also estimate the substitution between trade modes using Brexit as an exogenous shock, finding that UK firms increasingly relied on local affiliate sales to serve the EU market after 2016. This shift protected firm-level services exports from the expected higher trade barriers after Brexit, but at the cost of lower domestic employment. |
| Keywords: | Trade Shocks, Services Trade, Modes of Supply, Brexit |
| Date: | 2026–05–15 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2182 |
| By: | Luigi Capoani; Margarita Shnaider; Piergiorgio Martini |
| Abstract: | This paper investigates how geopolitical conflict reshapes trade patterns, focusing on the economic consequences of the Russo-Ukrainian war on European and global trade flows. War is conceptualized as a shock that increases bilateral trade costs within a structural gravity model, rather than as a force acting against trade flows, amplifying frictions in territories closer to the epicenter and reducing the economic attractiveness of major trade routes. The empirical analysis combines an Extended Gravity Model based on bilateral trade data from 2019 and 2023 with geographic, institutional, and political factors, including sanctions regimes and energy specialization. The findings show that war not only reduces trade volumes but also operates multiplicatively on trade frictions, influencing both the intensity and direction of trade disruptions, with more pronounced effects in the central corridors of the European market. As a result, some trade relationships collapse while others are redirected towards less exposed regions; furthermore, policy choices are decisive in shaping trade flows and contribute to isolating the Russian economy by creating a policy-induced trade void around the target country, while mechanisms such as the EU Single Market facilitate the internal reallocation of trade flows, preserving economic cohesion. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.16334 |
| By: | Alfaro, Laura; Chor, Davin |
| Abstract: | This paper documents stylized facts about the “Great Reallocation” in US supply chain trade following the 20182019 tariff shocks and the April 2025 Liberation Day announce-ments. 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 Chinas 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 adjust-ments 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) Trade reallocation has already accelerated after Liberation Day, in favor of trade partners facing lower additional tariffs and with ge-ographically 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 Chinas WTO accession. |
| Keywords: | Protectionism;Trade reallocation;Supply Chains;diversification |
| JEL: | D80 F10 F60 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:14596 |
| By: | Shoumitro Chatterjee (Johns Hopkins University); Arvind Subramanian (Peterson Institute for International Economics) |
| Abstract: | Concern over China's trade surplus is again resurging in the United States and Europe, but less attention has been paid to what China's surplus means for low- and middle-income countries. Despite becoming a richer and higher-tech economy, China continues to occupy a large share of global low-skill-intensive export markets such as apparel and footwear, precisely where low- and middle-income countries compete most directly. The authors document what they call a "China Squeeze, " which is limiting the industrialization opportunities traditionally used by these countries to grow their economies and create jobs. -Key Takeaways - The "China Squeeze" affects low- and middle-income countries through three major channels: intense competition in global export markets, rising Chinese import competition in their own domestic markets, and limited access to China's own consumer market for low-skill-intensive exports from developing countries. - The scale of the squeeze is historically unprecedented and may represent hundreds of billions of dollars in lost exports and forgone jobs in labor-intensive manufacturing in developing countries. - Macro indicators on wages, productivity, and exchange rate policy suggest that distortions, especially an undervalued renminbi, may have played a role. Regardless of the cause, China's dominance may be closing off the traditional manufacturing-led development path for low- and middle-income countries. |
| Keywords: | China, export competition, low- and middle-income countries, industrialization, low-skill manufacturing, value-added trade, China shock, exchange-rate policy |
| JEL: | F13 F14 F16 F43 F63 O14 O19 O24 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:iie:wpaper:wp26-7 |
| By: | Tadashi ITO |
| Abstract: | This paper evaluates the effectiveness of the EU’s post-2022 export embargoes on goods with potential military applications against Russia. Using HS6-level UN Comtrade data for 2019–2024, I first estimate gravity-style specifications and event-study designs that confirm a sharp and immediate contraction in direct EU exports of embargoed goods to Russia. I then propose a product-level identification strategy that links potential transit country’s imports of an HS6 product from the EU to its exports of the same product to Russia in the post-2022 period. The results indicate that (i) EU export controls substantially reduced direct shipments, (ii) some Caspian littoral countries and major non-sanctioning suppliers—China, India, and Turkey—expanded exports of comparable goods to Russia, and (iii) there is nuanced but limited evidence of roundabout trade, whereby sanctioned goods were exported from the EU to these Russia-friendly countries and then re-exported to Russia. These findings imply that the effectiveness of export embargoes hinges not only on the scope of the listed items but also on enforcement that targets high-risk transit routes and substitute suppliers. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:26036 |
| By: | Mitchener, Kris James (Santa Clara University, CAGE, CESifo, CEPR & NBER); Pedemonte, Mathieu (Inter-American Development Bank) |
| Abstract: | Using newly digitized monthly data on the quantities and prices of imports as well as product-level data on tariff rates, we estimate that in the first year after the passage of the Smoot-Hawley Tariff Act, imports facing rate increases fell swiftly and dramatically relative to imports not affected by tariffs: for a one-percentage-point increase in the tariff rate, they declined by an average of 4%. We also estimate that the incidence of Smoot-Hawley was almost entirely borne by U.S. importers. Using an open economy model, we attribute our high measured short-run trade elasticity of greater than 4 to fixed exchange rates that the U.S. maintained with most trade partners in the first 15 months after enactment. Our model also suggests that Smoot-Hawley ac counted for 27% of the decline in total US imports in the first year after enactment. Finally, we construct both partial equilibrium and general equilibrium welfare estimates of Smoot-Hawley. Both methods deliver welfare losses of about 0.2% of GDP, reflecting the high measured elasticity of substitution and low US import-GDP ratio. |
| Keywords: | Trade policy, pass through, Smoot-Hawley Tariff, trade elasticity, international trade, tariff incidence, welfare analysis of tariffs JEL Classification: F10, F13, F14, F63, F68, N12, N72 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:cge:wacage:805 |
| By: | Nicola Daniele Coniglio (University of Bari Aldo Moro); Matteo Lanzafame (Asian Development Bank); Davide Vurchio (University of Bari Aldo Moro) |
| Abstract: | Export baskets reflect broader processes of structural change and economic development. While most studies emphasize the emergence of new export specializations, this paper examines an equally important yet neglected pattern—trade exits, defined as sustained declines in revealed comparative advantage. Using a large sample of economies from 2000 to 2019, we show that trade exits are widespread, with more than one-third of trade specializations disappearing during this period. We document substantial heterogeneity across economies and sectors and identify both product- and economy-level drivers of exits. We pay particular attention to the role of product relatedness and to the growing participation of the People’s Republic of China in the global economy—the so-called “China shock”—in shaping exit dynamics, especially in industrial products. Our findings provide new insights into the dynamics of structural transformation in the global economy, with a focus on Asian Development Bank developing economies. |
| Keywords: | trade exits;de-specialization;deindustrialization;the China shock;structural change;manufacturing;relatedness |
| JEL: | F10 O10 O30 O14 O25 L60 |
| Date: | 2026–05–12 |
| URL: | https://d.repec.org/n?u=RePEc:ris:adbewp:022480 |
| By: | Hanwei Huang; Yuyuan Yu |
| Abstract: | While import restrictions are increasingly deployed to achieve non-trade objectives such as environmental protection, they often create distortions and leakage through illicit trade. We examine this trade-off in the context of China's waste import ban. Although the policy produced measurable improvements in air and water quality, it also induced significant behavioral responses, including surging evasion via quantity underreporting, heightened smuggling-related criminal activity, and deteriorating performance among affected firms. To quantify the welfare effects, we develop a hybrid sufficient statistic framework that integrates reduced-form evasion elasticities with structural estimates of shadow costs. We find that the environmental gains were more than offset by the costs of smuggling and losses from distortions. |
| Keywords: | Waste, Smuggling, Quota, Pollution, Firm Performance, Sufficient Statistics, Welfare, China |
| Date: | 2026–05–15 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2181 |
| By: | Isabella Gourevich |
| Abstract: | Recycling and waste trade are increasingly important for mitigating supply risks and en-vironmental concerns associated with raw material imports, yet little is known about the economic and technical potential for substitution between recycled and virgin materials. This paper estimates material-specific cross-price elasticities of substitution using novel global trade data for major recyclable materials from 2013 to 2023, instrumenting vir-gin-material prices with export restrictions. Results show substantial heterogeneity across materials: those with established recycling technologies respond strongly to price incentives, while others display limited substitutability, highlighting the role of technolog-ical feasibility beyond economic viability. Using the estimated elasticities, I evaluate the policy mix required to meet the EU’s 25 percent recycled-content target and document a central misalignment between circular-economy goals and climate-optimal policy. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ifowps:_427 |
| By: | Goldberg, Pinelopi; Juhász, Réka; Lane, Nathan; Lo Forte, Giulia; Thurk, Jeff |
| Abstract: | The resurgence of subsidies and industrial policies has raised concerns about their potential inefficiency and alignment with multilateral principles. Critics warn that such policies may divert resources to less efficient firms and provoke retaliatory measures from other countries, leading to a wasteful “subsidy race.” However, subsidies for sectors with inherent cross-border externalities can have positive global effects. This paper examines these issues within the semiconductor industry: a key driver of economic growth and innovation with potentially significant learning-by-doing and strategic importance due to its dual-use applications. Our study aims to: (1) document and quantify recent industrial policies in the global semiconductor sector, (2) explore the rationale behind these policies, and (3) evaluate their economic impacts, particularly their cross-border effects, and compatibility with multilateral principles. We employ historical analysis, natural language processing, and a model-based approach to measure government support and its impacts. Our findings indicate that government support has been vital for the industry’s growth, with subsidies being the primary form of support. They also highlight the importance of cross-border technology transfers through FDI, business and research collaborations, and technology licensing. China, despite significant subsidies, does not stand out as an outlier compared to other countries, given its market size. Model estimates suggest the presence of learning-by-doing at the firm-product level as well as economies of scope within a firm and substantial cross-border learning spillovers. These spillovers likely reflect cross-country technology transfers and the role of fabless clients and input suppliers in disseminating knowledge globally through their interactions with foundries. Such cross-border spillovers are not merely accidental but result from deliberate actions by market participants that cannot be taken for granted. Firms may choose to share knowledge across borders or restrict access to frontier technology, thereby excluding certain countries. Future research will use model estimates to simulate the quantitative implications of subsidies and to explore the dynamics of a “subsidy race” in the semiconductor industry. |
| Keywords: | semiconductors; industrial policy; subsidies; learning-by-doing; multilaterism |
| JEL: | F13 L63 N60 O38 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:138525 |