Abstract

This paper examines the impact of economic and trade policy uncertainty on US imports, US exports, and foreign direct investment inflows to the United States. Using alternative indices of uncertainty and controlling for the level of tariffs, I find that higher levels of US policy uncertainty generally depress international trade and investment and increase the variability of investment inflows. Higher levels of policy uncertainty abroad also impact trade and investment flows. Consumers and businesses would benefit from clear signals concerning the future course of economic policy in the United States and abroad.

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