Reciprocal Tariffs in the Quest for Balanced Trade: A Zero-Sum Game for the WTO

In his article The Purchasing Power of British Exports (Economica, February, 1955) Mr. R. L. Marris draws attention to the well-known historical fact that the volume of British exports tends to rise when the terms of trade become more adverse to the United Kingdom and to fall when they become more favourable. This relationship is shown and calculated with the aid of two charts. In the first chart the volume of merchandise exports for each of 29 years from 1920 to 1954 is plotted against the volume of imports that could be paid for each year out of that year's exports. The balance of trade is thus taken to be in regular. equilibrium. The purchasable volume of imports is obtained by deflating the export volume for each year by that year's terms of trade index. The relationship is held to be linear, i.e. a constant amount of decrease in the terms of trade is associated with a unit increase in the volume of exports. In the estimating equation the terms of trade are taken as the dependent variable. In the next chart the volume of exports is plotted against the terms of trade indices for 19 years over the period 1920-52. The linear correlation coefficient is found to be 0i95 and the estimating equation suggests that the volume of exports could be predicted by subtracting 100 from twice the sum of the terms of trade index for the year in question. For the inter-war years the predicted volumes closely approximate the actual volumes while for the post-war years the margin of error is greater and a number of adjustments of either the actual volumes or the actual terms of trade indices is suggested. On the basis of these calculations Mr. Marris urges a radical change in the United Kingdom's foreign trade policy and issues a challenge to those who support the policy of increased exports. Several detailed criticisms of the procedure followed by Mr. Marris might be advanced. Thus the appropriateness of the suggested adjustments for the postwar period, when the estimating equation was found less satisfactory, might be questioned. The absence of adjustments for the period after 1929 might be queried in view of the fact that the rapid growth of exchange and import controls would hardly permit the fulfilment of what is said to be essentially an equilibrium demand relationship . Again, Mr. Marris alleges that the historical data are innocent of changes due to a relative movement in the prices of United Kingdom manufactures and those of competitors in third markets, because such relative movements just did not take place after 1918. This view is quite contrary to the facts, as demonstrated by Sir Donald MacDougall in

The current state and prospects for the development of foreign trade relations of the United States of America are determined. The place of the United States in the global economy is identified. Attention is focused on modern tariff policy, in the context of the imbalance of the balance of payments. Modern principles of implementation and regulation of foreign trade of the United States are established. The terms and rates of import duties are analyzed in the context of the new foreign trade policy. Foreign trade in goods and services is considered. The dynamics and volume of exports, imports, trade turnover and the balance of trade balance are highlighted. Using linear regression, trends in the volume of exports, imports, trade turnover and the balance of foreign trade in goods and services are determined, and attention is focused on the growth trends of indicators. It is established that the United States has a negative trade balance in trade in goods and a positive one in trade in services. The geographical structure of exports and imports of the United States is determined. The commodity structure of exports and imports is analyzed. It was established that the main commodity groups in the exports of the United States of America are goods with high added value and a degree of processing: office machines, electrical engineering, energy and transport equipment, photographic equipment, medical and pharmaceutical goods. Attention is focused on the fact that raw materials and semi-finished products prevail in the import structure, with a steady trend towards a decrease in volumes. The main goods in imports are: oil, natural gas, office machines, medical and pharmaceutical products, transport equipment. The dynamics of changes in trade in goods and services of the United States is determined. The countries with which the United States has the largest trade balance deficit are identified. The impact of the tariff and monetary policy of the United States on economic processes in the world is studied. Attention is focused on bilateral trade and economic relations of the United States with the People's Republic of China, Mexico, Canada, and the European Union – as the largest trading partners.

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일방적 통상정책의 국제적 확산과 무역구조의 변화에 관한 연구 (A Study on Unilateral Trade Policy and International Trade Structure)

The United States-China trade war has an impact on the current account balance and trade balance. The US-China trade war also caused a decline in the price of CPO, which resulted in a decrease in the number of palm oil exports. The existence of Indonesia's RED policy has experienced a decline in CPO exports to European Union countries. The purpose of this research is to analyze the development of production, volume and export value of Indonesian CPO and to find out which countries are the largest export destinations for Indonesian CPO. This study uses a descriptive approach, which analyzes the development of Indonesian Palm Oil (CPO) exports before and after the United States-China trade war. The data source comes from BPS (Central Bureau of Statistics) in the form of secondary data from 2013-2019. Judging from the area of Indonesian palm oil has an increasing trend from 2013-2019 except in 2016 which decreased by 0.06 million hectares compared to 2015. CPO production every year from 2013 to 2019 has increased. The volume of palm oil exports from 2013 to 2019 experienced increased fluctuation except in 2016 where the export volume decreased by -14%. The countries that are the biggest export destinations for Indonesian CPO are India, China, the Netherlands, Pakistan, Italy, Singapore, Bangladesh, Egypt, Spain, and the United States. The volume of palm oil exports from 2013 to 2019 experienced increased fluctuation except in 2016 where the export volume decreased by -14%. The countries that are the biggest export destinations for Indonesian CPO are India, China, the Netherlands, Pakistan, Italy, Singapore, Bangladesh, Egypt, Spain, and the United States. The volume of palm oil exports from 2013 to 2019 experienced increased fluctuation except in 2016 where the export volume decreased by -14%. The countries that are the biggest export destinations for Indonesian CPO are India, China, the Netherlands, Pakistan, Italy, Singapore, Bangladesh, Egypt, Spain, and the United States.

The economic relationship between China and the United States is very important. The United States has become the largest market for Chinese exports, and it is also China's largest source of trade surplus except Hong Kong. In recent years, the United States has surpassed Japan as the largest direct investment country in China, except Hong Kong. The domestic market capacity of the United States is very large, and the total annual import and export volume far exceeds China's annual gross domestic product. Although the United States will complain about the deficit in bilateral trade, due to the large domestic market and a long tradition of free trade, the general public is very tolerant. So the US market has huge potential to absorb Chinese products. In addition to the highly complementary trade structures between China and the United States, the two big countries also offer each other very attractive investment prospects. The United States has a wide range of talents from all walks of life. The infrastructure is highly developed and highly regulated and open. These certainly provide very attractive prospects for Chinese investment. For the United States, China needs to transform into a modern country, from rural to urban, from transportation, energy to industry, science and technology, from culture, education to health, and sanitation. The investment required is at least trillions of dollars. The abundant capital, advanced technology, superb management, and thoughtful service of the United States have great appeal to China.

This study explores the dynamics and process of the trade dispute between the United States (US) and China from 2018 to 2020. The primary focus is on the implementation of import tariffs by the US, aimed at addressing the trade deficit, reducing imports, and increasing exports. US trade policy was influenced by economic and political motives, with the main goal of maintaining US economic dominance and pressuring China to reform its trade practices. This study employs a descriptive qualitative methodology based on post-positivist philosophy, utilizing secondary data from literature reviews and internet sources. The findings indicate that the import tariffs successfully reduced imports and increased US exports in 2020, while protecting domestic industries and the agricultural sector from the retaliatory tariffs imposed by China. This policy reflects a mercantilist approach, emphasizing the protection of domestic industries and the balancing of the trade deficit. The trade dispute has significant impacts on the global economy and underscores the importance of constructive dialogue for conflict resolution. This study suggests the need for a deeper analysis of the dispute's impact on the global economy and society. The conflict has broad implications for the global economy, increasing the cost of goods, and affecting monetary and fiscal policies in both countries. Resolving this dispute is crucial for global economic and political stability, requiring constructive dialogue and close international cooperation.

In this paper we construct a new measure of U.S. prices relative to those of its trading partners and use it to reexamine the behavior of U.S. net exports. Our measure differs from existing measures of the dollar's real effective exchange rate (REER) in that it explicitly incorporates both the difference in price levels between the United States and developing economies and the growing importance of these developing economies in world trade. Unlike existing REERs, our measure shows that relative U.S. prices have increased significantly over the past 15 years. In terms of simple correlations, the relationship between our measure of relative prices and U.S. net exports is much more coherent than that between existing REERs and net exports. To explore this relationship further, we use our measure to construct an index of foreign prices relevant for U.S. export volumes and reexamine several export equations. We find that export equations with the new index dominate those with previous measures in terms of in-sample fit, out-of-sample fit, and parameter constancy. In addition, we find that with the new index of foreign prices the estimated elasticity of U.S. exports with respect to foreign income is a good bit higher than the unitary elasticity found in previous studies using other price measures. This has implications for U.S. current account adjustment.

In this paper we construct a new measure of U.S. prices relative to those of its trading partners and use it to reexamine the behavior of U.S. net exports. Our measure differs from existing measures of the dollar's real effective exchange rate (REER) in that it explicitly incorporates both the difference in price levels between the United States and developing economies and the growing importance of these developing economies in world trade. Unlike existing REERs, our measure shows that relative U.S. prices have increased significantly over the past 15 years. In terms of simple correlations, the relationship between our measure of relative prices and U.S. net exports is much more coherent than that between existing REERs and net exports. To explore this relationship further, we use our measure to construct an index of foreign prices relevant for U.S. export volumes and reexamine several export equations. We find that export equations with the new index dominate those with previous measures in terms of in-sample fit, out-of-sample fit, and parameter constancy. In addition, we find that with the new index of foreign prices the estimated elasticity of U.S. exports with respect to foreign income is a good bit higher than the unitary elasticity found in previous studies using other price measures. This has implications for U.S. current account adjustment.

Purpose: Despite the free and lower trade tariff policy, the United States (US) has recorded a persistent trade deficit and trade imbalances in the last four decades ago, therefore, this study empirically investigates the role of trade tariff policy on US supply chain imbalance and trade deficits reduction. Methodology: The study employs simple random and stratified sampling techniques to analyses the trend and univariate. Secondary data from US Census Bureau of Economic Analysis Department of Commerce on US international trade in goods and services from 1852 to 2024 were analysed to drawn inferences. Findings: This study finds that US trade tariff policy is not automatic to reduce supply chain imbalances and trade deficits in the United States. The US trade liberalization policy is associated with supply chain imbalance and trade deficits while the U.S. trade protectionism policy accounted for more trade surplus and supply chain balance. Also the study finds that a minimum threshold of 10 percent US weighted trade tariff rate to reduce the US trade supply chain imbalance and trade deficits Unique Contribution to Theory, Practice and Policy: This study supports the protectionism trade theory over the trade liberalization theory to aggressively promote exports but reduces imports through a number of trade barriers like tariff rate, imports restriction, and currency depreciation (devaluation) to make trading partners imports dependence while protecting country’s domestic industry from foreign competition. Recommendations to the current US President, Trump is to set a minimum of 10 percent weighted tariff rates on all goods and services to other trading partners while US should imposes a higher weighted tariff rates above 10 to all goods and services from China to swiftly reduce US trade deficits and supply chain imbalance to be more effective than Trump former US President administration and also President Biden administration.

Purpose: Despite the free and lower trade tariff policy, the United States (US) has recorded a persistent trade deficit and trade imbalances in the last four decades ago, therefore, this study empirically investigates the role of trade tariff policy on US supply chain imbalance and trade deficits reduction. Methodology: The study employs simple random and stratified sampling techniques to analyses the trend and univariate. Secondary data from US Census Bureau of Economic Analysis Department of Commerce on US international trade in goods and services from 1852 to 2024 were analysed to drawn inferences. Findings: This study finds that US trade tariff policy is not automatic to reduce supply chain imbalances and trade deficits in the United States. The US trade liberalization policy is associated with supply chain imbalance and trade deficits while the U.S. trade protectionism policy accounted for more trade surplus and supply chain balance. Also the study finds that a minimum threshold of 10 percent US weighted trade tariff rate to reduce the US trade supply chain imbalance and trade deficits Unique Contribution to Theory, Practice and Policy: This study supports the protectionism trade theory over the trade liberalization theory to aggressively promote exports but reduces imports through a number of trade barriers like tariff rate, imports restriction, and currency depreciation (devaluation) to make trading partners imports dependence while protecting country’s domestic industry from foreign competition. Recommendations to the current US President, Trump is to set a minimum of 10 percent weighted tariff rates on all goods and services to other trading partners while US should imposes a higher weighted tariff rates above 10 to all goods and services from China to swiftly reduce US trade deficits and supply chain imbalance to be more effective than Trump former US President administration and also President Biden administration.

This study aims to analyze the effect of exchange rate asymmetry on the trade balance between East Java Province and the largest trading partner countries (China, Japan, and the United States) in the short-run and long-run and to detect the J-Curve phenomenon. This study uses the Nonlinear Autoregressive Distributed-Lag (NARDL) method with 2010Q1 - 2023Q1 time-series data. The results of the study show that in the short-run, both the appreciation (NEG) and depreciation (POS) of the exchange rate have no effect on East Java's trade balance in all models. However, in the long-run, exchange rate appreciation and depreciation have a significant negative effect on East Java's trade balance across all models. Based on the estimation results, it can be concluded that there is no J-Curve phenomenon in East Java's trade balance with trading partner countries. Because in the asymmetry model, the J-Curve phenomenon can occur if depreciation or appreciation has a significant positive effect and is cointegrated in the long-run, regardless of the short-run coefficient being positive or negative and significant or not significant. From these conditions, it can be concluded that the trade industry in East Java is called inelastic. That is, price changes do not affect demand for export and import volumes. Therefore, the policy of depreciating the Rupiah exchange rate is not the best strategy to be implemented as an export promotion for East Java because only a few sectors benefit.

Production Globalization Makes China’s Exports Cleaner

The United States'strong commitment to global protection of intellectual property rights is rooted in its goal to preserve or regain the competitiveness and dominance of United States exports. In recent years, the United States has been experiencing significant and growing trade imbalances with its trading partners. The development of the Section 301 provisions in the Omnibus Trade and Competitiveness Act of 1988 ("Trade Act") over the past twenty years reflects the United States'commitment toward international intellectual property protection. Reacting to GATTs inability to ensureprompt action on complaints froth the United States involving proliferating bilateral and free trade agreements. Congress created Section 301 as part of the 1974 Trade Act Subsequently in 1984, recognizing the lack of intellectual property protection in other countries and the billions dollars lost by the United States intellectual property rights holders, Congress amended Section 301 to specifically address these issues. The 1984 Trade Act authorized the president to impose trade sanctions against any country that did not provide adequate intellectual property protection and engaged in "unreasonable and unjustifiable'' trade practices. The 1988 Trade Act further amended Section 301 by creating Special 301 provisions, and by granting the United States Trade Representative ("USTR") authority to act on behalf of the interests of the United States intellectual property rights holders.

1. IntroductionIn an effort to boost employment, a country could stimulate its exports and discourage its imports and thereby improve its trade balance. One policy that has received a great deal of attention in the literature is currency devaluation. By making exports cheaper and imports expensive, devaluation is said to improve the trade balance. The only condition required is that the sum of import and export demand price elasticities exceed unity (that condition, known as the Marshall-Lerner condition, is derived under the assumption of perfectly elastic supply of trade). Most previous studies that attempted to assess the Marshall-Lerner condition relied on price elasticities that were obtained by estimating aggregate import and export demand functions. These studies provided mixed conclusions as far as the effectiveness of devaluation or depreciation is concerned. Examples include Houthakker and Magee (1969), Khan (1974), Goldstein and Khan (1976, 1978), Wilson and Takacs (1979), Haynes and Stone (1983a, 1983b), Warner and Krienin (1983), Bahmani-Oskooee (1986, 1998), and Bahmani-Oskooee and Niroomand (1998). The mixed conclusion could be related to aggregation bias. When aggregate trade data are employed in import and export demand functions, significant price elasticity with one trading partner could be more than offset by an insignificant price elasticity with another trading partner, yielding an insignificant price elasticity.Because of aggregation bias, another body of the literature has emerged in recent years that concentrates on using trade data at the bilateral level. Examples in this latter group include Rose and Yellen (1989), Cushman (1987, 1990), Summary (1989), Marquez (1990), Haynes, Hutchison, and Mikesell (1986), Eaton (1994), Bahmani-Oskooee and Brooks (1999), Nadenichek (2000), and Bahmani-Oskooee and Goswami (2004). Except Bahmani-Oskooee and Goswami (2004), all other studies in this second group have estimated bilateral trade elasticities between the United States and her major trading partners and concluded that the real bilateral exchange rate is a significant determinant of bilateral trade balance, at least in some cases. Bahmani-Oskooee and Goswami (2004), who considered the bilateral trade flows between Japan and her nine major trading partners, found that in most cases Japanese exports are not sensitive to the real bilateral exchange rate, but her imports are. These studies as well as those in the first group estimate price elasticities in demand under the assumption that supply is perfectly elastic and then evaluate the Marshall-Lerner condition involving own-price coefficients in demand. Thus, evidence in these studies is limited because it assumes perfectly elastic supply of trade for both exports and imports.Although there is additional room to expand the literature in the second group by considering the experiences of countries other than the United States and Japan, in this paper we would like to open another avenue of research by investigating the impact of real depreciation of the dollar on imports and exports of 66 American industries, a disaggregation by industry rather than by country. Disaggregation by industry will avoid problems associated with petroleum imports, as does disaggregation by country (Rose and Yellen 1989).1 For this purpose, in Section 2 we outline the import and export demand functions for each commodity group along with the estimation method. In Section 3, we present the empirical results. Section 4 provides our summary and conclusion. Data definitions and sources are cited in an appendix.2. The Models and the MethodIn formulating any import and export demand function, it is a common practice to relate the volume of imports and exports to a measure of income and relative prices. The main purpose is to obtain estimates of import and export demand elasticities so that we can better judge the effectiveness of currency devaluation in increasing a country's inpayments and reducing outpayments. …