Foreign Tariffs Research Articles

British exports and foreign tariffs: Insights from the Board of Trade's foreign tariff compilation for 1902

AbstractThis research note contributes to the debate over whether British exports were elastic to foreign tariffs before the First World War. In doing so, this study is the first to make econometric use of the commodity‐ and country‐disaggregated foreign tariff data that Britain's Board of Trade compiled for the year 1902. Contrary to previous literature, British exports were indeed elastic to foreign tariffs across a range of manufactured commodities, with a conservative estimate of the elasticity being 3.1, which is not low by modern standards. Counterfactually, if foreign countries had emulated Britain's policy of free trade in manufactures in 1902, a partial‐equilibrium estimate is that British exports would have been 57 per cent higher. If the trade‐liberalizing trend of the mid‐nineteenth century persisted into the late‐nineteenth century, then much of the late‐Victorian deceleration of British exports would have been avoided.

ВАЛЮТА ҚИММАТЛИКЛАРИНИНГ ЎЗБЕКИСТОН РЕСПУБЛИКАСИДАН НОҚОНУНИЙ РАВИШДА ХОРИЖИЙ ДАВЛАТЛАРГА ОЛИБ ЧИҚИБ КЕТИЛИШИГА ҚАРШИ КУРАШ -ДОЛЗАРБ ВАЗИФА!

Today, as a result of the reforms carried out in the field of currency policy liberalization in the Republic of Uzbekistan, a wide range of favorable opportunities for entrepreneurs and citizens engaged in foreign economic activity is being created. Nevertheless, there are attempts to illegally use the opportunities created by some citizens and "unclean entrepreneurs", in particular, there arecases of illegal withdrawal of currency values from the Republic of Uzbekistan to foreign countries.This situation, in turn, causes an escalation and growth of illegal withdrawal of currency values from the Republic of Uzbekistan to foreign countries. Since the fight against the illegal export of currency values from the Republic of Uzbekistan to foreign countries remains an urgent task. Based on the above, this scientific article will cover in detail the importance and relevance of the fight against the illegal export of currency values from the Republic of Uzbekistan to foreign countries, proposals for measures to prevent it. Keywords:protectionism, currency, currency values, foreign economic activity, illegal export, import, export, tariff and non-tariff regulation.

The Impact of the 2018-2019 Trade War on U.S. Local Labor Markets

We study the impact of the 2018-2019 trade war on U.S. local labor markets, distinguishing between regional exposure to foreign tariffs on U.S. exports, U.S. import tariffs, and U.S. tariffs on intermediate inputs. We find foreign retaliatory tariffs on U.S. exports have led to an increase in local unemployment rates, and this effect is magnified for regions specialized in non-manufacturing tradable goods (e.g. agriculture). U.S. import tariffs, on the other hand, have had an impact on local labor market conditions primarily through input-output linkages, leading to a decline in the employment share in the manufacturing sector and a decline in regional earnings.

Dissecting the Impact of the 2018-2019 Trade War on U.S. Exports

During the 2018-2019 trade war, U.S. exports have been affected by foreign retaliatory tariffs, U.S. import tariffs that act through input-output linkages, and policy uncertainty. We establish, first, that the large negative impact of foreign tariffs on U.S. exports is highly heterogeneous across destinations and industries, being much larger among exports to China, particularly of industrial supplies, and is explained by the degree of product differentiation and the extent to which trade occurs within related parties. Second, supply chains matter, as U.S. import tariffs lead to lower exports by industries using targeted imports as inputs. Third, beyond the direct impact of tariffs, uncertainty appears to play an important role, as suggested by a collapse in exports of durable goods relative to nondurables, and in sectors facing a larger risk of tariff increases. The severity of the trade war's impact on U.S. exports is amplified by a limited ability to redirect exports across markets: increased exports to the rest of the world only partially offset the decline in sales to China. Finally, we establish that the impact of tariffs on U.S. export volumes and prices is essentially different than that of exchange rates.

Внешнеторговая политика Д. Трампа: риски и вызовы на уровне штатов

The paper examines the dynamics of exports and imports by states under the President D. Trump’s foreign trade policy; the effects of the unprecedented tariff raising against the United States’ trading partners that keep world trade tensions and uncertainty at high level. While these tariffs provided some protection for certain American producers who face competition with imports, many other producers met with tariffs launched in response by other countries (mainly China) against the U.S.’ exports, which hurt them in different parts of the American economy. By the way, foreign trade policy is remaining one of the topics in the pre-election campaign in states that have both benefited or lost from new tariffs. The paper points out the distribution of exports and imports by states, including products that were mainly hurt by foreign tariffs. The blow of losses driven by tariffs on American agricultural products were softened by the United States’ agricultural subsidies, but the exporters are worrying about the prospect of further escalation of tariff risks which undermine their positions, about uncertainty at foreign markets. As polls show, a large part of registered voters do not believe that current trade negotiations may result in better economic conditions for Americans. The effects of new tariffs vary by states, but in some of them, D. Trump’s trade policy may play its role in the presidential elections, especially in counties more exposed to trade losses and having no gains from the United States’ tariff protection. The economic and trade agreement between the U.S. government and the government of China is of great importance, but seems unreal. Acknowledgements. The article has been supported by a grant of the Russian Foundation for Basic Research (RFBR). Project no. 20-014-00001А “Global and Regional Effects of U.S. Economic Policy in the Second – the Beginning of the Third Decade of the 21st Century: New Challenges and Chances for Russia”.

Mirror, Mirror, on the Wall: The Danger of Imposing 'Reciprocal' Tariff Rates

Proposals to match higher foreign tariffs with higher, “reciprocal” US tariffs would be an economic and administrative nightmare. This policy would violate the long-standing US commitment to apply tariffs on a nondiscriminatory “unconditional most-favored nation” (MFN) basis, a core principle of the international trading system. Applying reciprocal rates would exponentially complicate the US tariff code, lead to higher duties on a range of imports important to US consumers and producers, and invite retaliation from major trading partners. Specifically, if applied to the United States’ top 10 MFN trading partners, reciprocal tariffs would result in a nearly 10-fold increase in the number of duty lines in the US tariff code. The average US duty on imports from those nations would more than double, from 2.1 to 5.4 percent. Imposing reciprocal duties would ultimately threaten to unravel a postwar global trading system that has reduced tariffs worldwide while protecting US exporters from discrimination.

The use of valuations of healthcare services in other countries (basic benefits basket) in the tariffing process

The Agency for Health Technology Assessment and Tariff System is national institution supervised by Minister of Health. Agency is an advisory body in the reimbursement process. One of the Agency’s roles is setting a tariff for publicly funded healthcare services. Determining the cost of medical services is one of the most important conditions for valuating these tariffs. As in most European countries, the system of financing in-patient care in Poland is based on the Diagnosis Related Group system (DRG). DRG systems were created to increase efficiency in the use of available resources, and consequently to improve the quality of medical care. In order to compare the method and level of financing healthcare services with their equivalent abroad, the Agency analyzes information from other countries, especially those with GDP per capita similar to that of Poland. The Agency searches for patient group classification methods, payment methods, the shape of services and all factors affecting the valuation of services. The article describes the Polish inpatient services system against the background of solutions functioning in the world. The pricing process was presented, with particular emphasis on the process of obtaining data on foreign tariffs and their impact on the construction and pricing of healthcare services in Poland.

Direct and indirect effects of trade liberalization: Evidence from Chile

Production networks can amplify the effects of trade reforms on firms performance. In this article, I examine the effect of a reduction of foreign tariffs on the productivity of supplier industries of exporters. Using a panel of Chilean plants during a period of trade liberalization with the European Union, the United States, and the Republic of Korea, I show that the average reduction in the foreign tariff faced by downstream industries (1.1 percentage points) increases the productivity of intermediate input suppliers industries by 1.5 percent. The increase in productivity among supplier industries accounts for 22.5 percent of aggregate productivity gains. I find that tariff cuts induce firms to acquire new machinery and pay higher wages to skilled workers. The results are robust when I control for the change in domestic competition and the access to foreign inputs that could potentially drive productivity growth following output and input tariff elimination.

Anglo‐American trade costs during the first era of globalization: the contribution of a bilateral tariff series†

AbstractPrevious scholarship has suggested that British trade was generally unaffected by foreign tariffs during the period from 1870 to 1913. This article focuses specifically on Anglo‐American trade, which was the largest bilateral flow of trade during the first era of globalization, and finds that tariffs were the sole intertemporal determinant of Anglo‐American trade costs. However, the determinacy of tariffs for Anglo‐American trade costs only becomes apparent when the tariff variable incorporates a measure of the bilateral American tariff toward Britain, which this article reconstructs. The article concludes by claiming that Anglo‐American trade represents a major qualification to any emerging consensus that foreign tariffs were of minor significance to the trade of late nineteenth‐century Britain.

Tariff pass-through, firm heterogeneity and product quality

The pass-through of tariffs to prices has critical implications for trade policy, but studies at the industry level mask potentially important firm-level heterogeneity in pass-through behavior. This paper investigates the response of U.S. export prices to changes in foreign tariffs at the firm level, accounting for firm productivity and endogenous product quality. In our model, exporting firms respond to foreign tariff reductions by upgrading product quality and increasing prices, resulting in incomplete tariff pass-through and in some cases a “quasi-Metzler paradox” (quality-unadjusted, tariff-inclusive prices increase). The upgrading response is greater for high productivity firms; however, the greater a product's scope for quality differentiation, the greater is the tendency for high productivity firms to have higher initial prices due to higher initial quality, resulting in a smaller tariff absorption elasticity (log increase in the tariff-exclusive price). Using U.S. transaction-level export data, plant-level manufacturing data, and multiple measures of scope for quality differentiation, we confirm several predictions of the theory, including an average firm-level quasi-Metzler paradox, an inverse relationship between the tariff absorption elasticity and firm productivity for products with high quality scope, and the reverse for products with low quality scope.

Good Jobs, Bad Jobs: What's Trade Got to Do with it?

Using US local labor markets between 1990 and 2010, we analyze the heterogeneous impact of rising trade exposure on employment growth of 'good' and 'bad' jobs. Three salient findings emerge. First, rising local exposure to import competition, via falling US tariffs or rising Chinese import penetration, reduces (increases) employment growth of bad (good) jobs. Conversely, improved local access to export markets, via falling foreign tariffs, increases (reduces) employment growth of bad (good) jobs. Second, falling US tariff protection is substantially more important, economically and statistically, than rising Chinese import penetration. Third, globalization generates occupational polarization but not job polarization.

The asymmetric effects of tariffs on intra-firm trade and offshoring decisions

This paper studies the effects of tariffs on intra-firm trade. Building on the Antràs and Helpman (2004) North–South theoretical framework, I show that higher Northern tariffs reduce the incentives for outsourcing and offshoring, while higher Southern tariffs have the opposite effects. I also show that increased offshoring and outsourcing imply a decrease in the ratio of Northern intra-firm imports to total imports, an empirically testable prediction. Using a highly disaggregated dataset of U.S. (the North) imports and relevant U.S. and foreign tariffs, I find robust evidence to support the model's predictions.

On the Relationship between Tariff Levels and the Nature of Mergers

Abstract This paper employs an endogenous merger formation approach in a two-country oligopoly model of trade to examine the international linkages between the nature of mergers and tariff levels. Firms sell differentiated products and compete in a Bertrand fashion in product markets. Two effects play key roles in determining equilibrium market structure: the tariff saving effect and the protection gain effect. The balance between these two effects implies that, when foreign country practices free trade, low home tariffs yield international mergers irrespective of the substitutability levels. By contrast, when foreign tariffs are sufficiently high and products are close substitutes, national mergers obtain in the equilibrium. Unlike this asymmetric result of unilateral trade liberalization, we find that when bilateral tariffs are sufficiently low, international mergers arise. These results fit well with the fact that global trade liberalization has been accompanied by an increase in international merger activities. From a welfare perspective, we show that international mergers are preferable to national mergers and thus social and private merger incentives become aligned together as trade gets bilaterally liberalized. Finally, if countries can commit to a trade policy, they would optimally commit to a low tariff to induce international mergers when products are close substitutes while any tariff commitment is optimal when products are sufficiently differentiated.

Trade liberalization, wages, and specialization in China

This paper studies the evolution of regional specialization in China in response to trade liberalization. Using a panel of Chinese export data at the detailed commodity level over the period of 1988–2006, we show that China’s regional specialization follows a U-shaped pattern: both the interior and coastal regions diversify from 1988 to 1994 but specialize during the later reform period of 1994–2006. A theory of tariff reductions is proposed by constructing the Dornbusch–Fischer–Samuelson (1977) continuum of goods Ricardian model in a setup of two countries and three regions. The U-shaped pattern of specialization can be obtained from foreign tariff reductions followed by Chinese tariff reductions. This finding is supported by simulations, US–China trade policy review, and the pattern of China’s coast–inland wage ratio.

Trade Liberalization and Industry Dynamics

This paper uses a large data set for 28 industries in 40 countries to examine the effects of trade liberalization on the number of firms, the average size of surviving firms, and markups. We extend previous studies by examining not only tariff changes in the liberalizing country but also trade reforms in the rest of the world. In addition, we look at whether these effects differ across industries depending on their degree of comparative advantage. The results show that a reduction in home tariffs decreases the number of establishments, firms average size, and markups. All of these three effects are found to be of lower magnitude for comparative advantage industries. In the case of foreign tariffs, our results show that a reduction in protection in the rest of the world is associated with an increase in the number of establishments (which is likely to be reflecting an increase in export profitability), a decrease in average size, while markups are mostly unaffected. As with home tariffs, these effects tend to be less pronounced in comparative advantage industries.

Does textile sector trade of Mexico drive international competitive advantage?

This paper analyses how China's admission into the World Trade Organization (WTO) has affected the Mexican Textile Industry. The authors discuss the implications of China's entry into the WTO for Mexico and the bilateral relationship between China and Mexico from the perspective of growth in international trade and economic development. The issues of foreign direct investment (FDI), tariffs and business environment for the foreign companies in Mexico have also been discussed in the paper.

Trade Policies as Signals of Private Political Pressure

The situation of a home government facing political pressure from an exporting industry within its jurisdiction is considered. If a foreign government cannot directly observe such pressure, the home government has an incentive to understate it to induce foreign tariff reductions. In equilibrium, the home government will distort its first-period trade policy in a direction that the industry does not prefer (i.e. raising the export tax or reducing the export subsidy) in order to reveal the true pressure, as compared with a policy selected under complete information.

Improved Access to Foreign Markets Raises Plant-Level Productivity… for Some Plants*

We weigh into the debate about whether rising productiv- ity is ever a consequence rather than a cause of exporting. Export- ing and investing to raise productivity are complimentary activities. For lower-productivity firms, incurring the fixed costs of such invest- ments is justifiable only if accompanied by the larger sales volumes that come with exporting. Lower foreign tariffs will induce these firms to simultaneously export and invest in productivity. In contrast, lower foreign tariffs will induce higher-productivity firms to export without investing, as in Melitz (2003). We model this econometrically using a heterogeneous response model. Unique 'plant-specific' tariff cuts serve as our instrument for the decision of Canadian plants to start exporting to the United States. We find that those lower-productivity Canadian plants that were induced by the tariff cuts to start exporting (a) increased their labour productivity, (b) engaged in more product innovation, and (c) had high adoption rates of advanced manufacturing technologies. These new exporters also increased their domestic (Canadian) market share at the expense of non-exporters, which suggests that the labour productivity gains reflect underlying gains in TFP. In contrast, we find no effects for higher-productivity plants, just as predicted by our com- plementarity theory.

Trade liberalization, profitability, and financial leverage

We investigate the effects of trade liberalization on profitability and financial leverage using Canadian data arising from implementation of the Canada–US Free Trade Agreement. We find that falling domestic tariffs are associated with declining profits, especially for import-competing firms, while falling foreign tariffs are associated with increasing profits, especially for export-oriented firms. Also, import tariff reductions tend to increase leverage while export tariff reductions tend to decrease leverage.

What's the Point of Reciprocal Trade Negotiations? Exports, Imports, and Gains from Trade

This paper explains why trade‐policy makers may prefer reciprocal trade negotiations (RTN) to unilateral tariff reductions (UTR) for economic reasons. It answers puzzles like ‘Why WTO reciprocity?’ and strengthens the unnecessarily weak case made for the WTO by those who downplay or dismiss benefits from foreign tariff reductions (FTR).RTN is superior to UTR because it provides economic benefits that UTR cannot – namely, FTR benefits which are clearer than potentially important UTR benefits: Whereas each policy offers efficiency gains, any terms‐of‐trade effect of UTR generally detracts from these gains, while any terms‐of‐trade effect of FTR is typically beneficial (especially for a small price‐taking country) with this benefit augmenting FTR's efficiency gains. Moreover, benefits from reductions in foreign barriers may come from several sources; they are not solely the result of terms‐of‐trade improvement – or economies of scale (the two benefits already noted in the literature, though often dismissed). For example, with foreign NTB elimination, possible home benefits are shown even with rising costs and terms‐of‐trade deterioration. RTN is also superior to UTR because, by eliminating protection in either NTB or tariff form, RTN provides an escape from not only a terms‐of‐trade prisoners’ dilemma, but many other previously unrecognised prisoners’ dilemmas, including one in international rent transfers, and several others with no economies‐of‐scale or terms‐of‐trade motivation.Of course, if superior RTN is not an option, UTR may well be desirable. If reciprocity is an option, but only in a narrower CU or FTA form, such reciprocity may still be superior to UTR, or it may be inferior; theory cannot unambiguously rank these.