US Trade Research Articles

Tonia Novitz, Trade, Labour, and Sustainable Development: Leaving No One in the World of Work Behind Edward Elgar Publishing, 2024 - Kevin J. Middlebrook, The International Defense of Workers: Labor Rights, US Trade Agreements, and State Sovereignty Columbia University Press, 2024

Tonia Novitz, Trade, Labour, and Sustainable Development: Leaving No One in the World of Work Behind Edward Elgar Publishing, 2024 - Kevin J. Middlebrook, The International Defense of Workers: Labor Rights, US Trade Agreements, and State Sovereignty Columbia University Press, 2024

Is US trade policy reshaping global supply chains?

This paper examines the reshaping of supply chains using detailed US 10-digit import data between 2017 and 2022. The results show that while US-China decoupling in bilateral trade is real, supply chains remain intertwined with China. Over the period, China's share of US imports fell from 22 % to 16 % as a result of US tariffs. US imports from China are being replaced with imports from large, developing countries with revealed comparative advantage in a product. In strategic industries, countries replacing China tend to be deeply integrated in China's supply chains and are experiencing faster import growth from China. Put differently, to displace China on the export side, countries must embrace China's supply chains. There is no consistent evidence of reshoring but evidence of nearshoring to border nations. Despite the significant reshaping, China remained the top supplier of directly imported goods to the US in 2022.

The end of ESG? Return spillover between ESG and non-ESG portfolios

We investigate the return spillover between firms with environmental, social and governance (ESG) and non-ESG disclosure. Using a sample of Chinese firms from 2010 to 2022, we find that the ESG portfolio return has a stronger spillover effect on the non-ESG portfolio return. Moreover, the spillover effect between the two portfolios has decreased significantly in recent years, indicating that investors recognise ESG's unique advantage. Important global events, such as stock market crashes, the Sino–US trade wars and epidemics, increase ESG spillover into non-ESG portfolios.

Using equity market reactions to infer exposure to trade liberalization

We propose a method for identifying exposure to changes in trade policy based on asset prices that has several advantages over standard measures: it encompasses all avenues of exposure, it is natively firm-level, it yields estimates for both goods and service producers, and it can be used to study reductions in difficult-to-quantify non-tariff-barriers in a way that controls naturally for broader macroeconomic shocks. Applying our method to two well-studied US trade liberalizations provides new insight into service-sector responses and reveals dramatically different outcomes among small versus large firms, even within narrow industries.

US Trade Policy, China and the World Trade Organization, written by Nerina Boschiero

US Trade Policy, China and the World Trade Organization, written by Nerina Boschiero

Trade War Between US and China

This paper examines the US-China trade war (2018-2019) and its multifaceted impact on globalization. It explores the causes of the conflict, including China's alleged unfair trade practices and the US trade deficit. The research analyzes the war's consequences on both nations, encompassing economic disruptions, job losses, and agricultural decline. Additionally, the paper investigates the impact on other countries, with some benefiting from trade diversion while others facing economic strain. Finally, the involvement of US multinational corporations (MNCs) is explored, considering their potential support for some trade war goals while opposing increased tariffs that burden their operations. Keywords: US-China Trade War, Globalization, Trade Tariffs, Unfair Trade Practices, Trade Deficit, Economic Disruptions, Job Losses, Agricultural Decline, Trade Diversion, Multinational Corporations (MNCs)

Developments in US Trade Policy Amid the Shifting Dynamics of World Trade

Today, world trade stands at a juncture. The proliferation of unconventional, unilateral trade policies calls into question the fundamental legitimacy of the World Trade Organization (WTO). To date, the global trading system evolved alongside a plethora of exogenous factors, such as the US-China competition. The political realities came to reveal the inadequacies of the existing trading regime to receive unique non-market economies (NMEs) like China in the world market. To better withstand the changes in world trade, the US resorted to unconventional, unilateral trade tactics. But how exactly did we get here? This study argues that the root cause can be found in the developments in US trade policy under each US presidency. The study’s findings demonstrate that the overarching goal of US trade policy has remained remarkably consistent across different presidencies in terms of countering the rise of China. Along the way, the incumbent president’s different priorities and political ideals, and the sustained impact of China’s accession to the WTO, induce profound changes in US-China relations and, at large, the world trading system. In short, this article aims to provide a policy-wise explanation to the current conundrum in world trade by following the developments in US trade policy since China’s accession to the WTO.

US trade policy and the US dollar

We show that the US dollar response to trade policy uncertainty (TPU) is key to assessing the impact of US trade policy. Employing structural vector autoregressive models, we find that TPU shocks supported a multilateral USD appreciation during the 2018–19 trade tensions between the US and some of its major trading partners. We rationalize this in a two-country New Keynesian model with financial frictions that links the increase in TPU to rising demand for safe USD assets. Our findings suggest that the TPU-induced appreciation of the USD in 2018–19 significantly counteracted US trade policy attempts to raise US competitiveness.

Impact of the US Indo-Pacific Strategy on China-India Economic Cooperation

India has grown to be a significant component of the US Indo-Pacific strategic layout in South Asia because of its unique geographic location, political and economic power, and other factors. Through collaborative efforts within the Indo-Pacific Economic Framework (IPEF), the US and India have fostered project cooperation by aligning policy dispositions to address shared interests and contain China. Analysis of the economic and trade interactions between China and India suggests a declining trend in their cooperation from many perspective. In a strategic move, India opted out of the China-led Regional Comprehensive Economic Partnership Agreement in 2019 to prioritize economic and trade relations in accordance with its strategic objectives. In addition, India got supports and advancements in high-tech industries through the US Indo-Pacific strategy, consequently reducing collaboration with China in this sector. Furthermore, the US and India have taken measures to diversify supply chains and explore alternative trade routes, steering away from China and promoting regional industrial transfers. This shift has prompted India to intensify its focus on developing high-tech industries to lessen its dependence on China's industrial chain supply. These initiatives have also contributed to the formation of an internal trade network within the IPEF, disrupting traditional trade exchanges between China and India. However, the economic cooperation between the US and India falls short of reaching its full potential because of differences in national interests, history, culture, and other factors. Consequently, the impact of China-India economic relations is not catastrophic, even in the face of heightened US trade restrictions on China that have compelled India to make strategic decisions.

US international trade policy: Scenarios of protectionism and trade wars

US international trade policy under both the Trump and Biden administrations has been increasingly protectionist. This paper considers two policy scenarios under active discussion: (1) an across-the-board increase in all US tariffs by 10 percentage points, and (2) a severe escalation of the US trade war with China. The scenarios are analyzed using a multi-country computable general equilibrium (CGE) simulation model of the global economy. Trade wars or policy regimes of widespread protection will increase tariffs in many sectors simultaneously and include both final goods and intermediate inputs. The impacts are complex, with a web of direct and indirect forces coming into play across domestic and international markets. The global CGE model captures these mechanisms, including both short and long-run effects, with and without retaliation by partner countries. In a world economy where the US accounts for only 10 % of global trade and potentially rival trade bloc have emerged in Europe and E&SE Asia, the US is no longer hegemonic in global markets. We find that across-the-board tariffs do not protect manufacturing jobs because the cost of imported intermediate goods increases, raising costs in manufacturing production. The US trade war with China leads to a dramatic fall in bilateral trade. Other countries expand their trade to China and the US with the exception of closely linked partners (e.g. Canada and Mexico and all countries in E&SE Asia). We find that the world economy can adjust to US trade wars, diverting trade around the US.

US trade group sees chemical growth

US trade group sees chemical growth

Policy feedback and the politics of trade agreements

Why do interest groups mobilise to change the design of international institutions? The existing research on this topic expects moments when there is a peak in political action, but generally does not consider how such peaks might impact future mobilisations. To fill this gap, this article advances an analysis that draws on policy feedback theory. It shows that the greater the preference distances surrounding existing preferential trade agreements (PTA), the more likely it is for political activity to form around prospective trade deals that share certain key commonalities with those more contentious earlier agreements. The article tests the plausibility of that argument in the design of labour provisions in US and EU trade agreements. It shows that, in the US, NAFTA (ratified 1993) introduced a model of labour provisions that was seen over the years as ‘designed to fail’. As a result, it helped mobilise labour unions against prospective PTAs that bore a resemblance to NAFTA. However, the same did not happen in the EU during the 1990s and early 2000s. This article helps connect public policy research with the literature on the politics of trade agreements. It also serves as a cautionary note to policy makers regarding the long-term effects of PTA design on political activity and underscores the need for carefully projecting the political underpinnings of the enforcement of PTA provisions.

Американский политический класс и международная повестка: общее и особенное в контексте выборов 2024 года

The article is devoted to the study of the views of politicians within the Democratic and Republican parties in the United States on the basic problems of American foreign policy. The main focus is on a comparative analysis of such problems as the current state and future of the globalization, US trade and industrial policy, boundaries of using the military force, strategy of “pivot to Asia”, relations with allies, climate change. It is concluded that although American foreign policy remains bipartisan at this stage, nevertheless, as a result of the 2024 elections, this balance may be disrupted.

Trade Dilemma of Global Hegemony: Analyzing the Transition in US Trade Policy from Globalization Deals to Hybrid Deals

This paper presents an analysis framework of the trade dilemma faced by global hegemony. It argues that maintaining global hegemony and addressing domestic conflicts simultaneously is a challenging task. Since the 1980s, the United States has prioritized the expansion of transnational capital, often at the expense of domestic vulnerable industries and the interests of low-skilled workers. This unbalanced development has led to intensified social contradictions within the United States. To resolve these conflicts, the US has shifted from reciprocal globalization deals to self-interested hybrid deals, aiming to uphold the interests of transnational capital while also addressing the concerns of workers. The negotiation experiences of the United States–Mexico–Canada Agreement (USMCA) and the Indo-Pacific Economic Framework (IPEF) demonstrate this mode of the US trade policy. While this strategy may repair the domestic political foundation, it leads to new challenges for the US, such as discontent and resistance from the international community, or encountering difficulties in promoting cooperation with US trading partners. These challenges will pose a threat to the long-term stability of the international economic order.

The impacts of the China–US trade war on China’s trade and greenfield investment

We assess the impacts of the China–US trade war on the bidirectional trade and investment flows of China. We find that China’s exports and imports both dropped sharply after the trade war began. In terms of investment flows, we find that China’s greenfield investment in the US faltered in the face of the increasing trade friction, but the impact of the trade war on the US’s greenfield investment in China is ambiguous. In addition, the trade friction only impeded the export volumes of China and had an insignificant impact on the export prices. In contrast, both the import volumes and prices for China decreased.

US Trade Policy Uncertainty and Nigeria’s Participation in Global Value Chains: Evidence from Frequency Domain Causality, Wavelet Coherence Analysis, and Time-Varying Causality

AbstractThis study examines for the first time whether trade policy uncertainty emanating from the United States significantly predicts Nigeria’s participation in global value chains. It further examines the kind of global value chain participation in Nigeria (forward or backward linkages) that is most predictable by the United States trade policy uncertainty. To achieve the study objective, frequency domain causality, wavelet coherence analysis, and time-varying causality are employed in analyzing annual data sets over the period 1990–2019. The summary of the study findings is as follows; first, trade policy uncertainty emanating from the United States significantly predicts Nigeria’s overall integration into global value chains. Second, there is a positive association between Nigeria’s integration into global value chains and the United States trade policy uncertainty. Third, Nigeria’s overall integration into global value chains is highly correlated with the United States trade policy uncertainty in periods around the global economic crisis of 2007/08 and Nigeria’s recession of the late 2010s. Fourth, most of the predictability noticed in the relations between trade policy uncertainty generated by the United States and the overall global value chain participation is caused by the relations between the United States trade policy uncertainty and Nigeria’s forward linkage into global value chain participation.

Dynamic volatility among fossil energy, clean energy and major assets: evidence from the novel DCC-GARCH

The objective of this paper is to assess the dynamic volatility connectedness between fossil energy, clean energy, and major assets i.e., Bonds, Bitcoin, Dollar index, Gold, and Standard and Poor's 500 from September 17, 2014 to October 11, 2022. The main motivation of the study relates to examining the dynamic volatility connectedness mentioned during periods of important events such as the recent coronavirus pandemic and the Russia–Ukraine conflict which has shown the vulnerability of economic and financial assets, energy commodities, and clean energy. The novel Dynamic Conditional Correlation-Generalized Autoregressive Conditional Heteroskedasticity (DCC-GARCH) approach is employed for the investigation of the sample period mentioned. Empirical analysis reveals that both the total and net volatility connectedness between assets is time-varying. The highest connectedness among the assets is observed with the onset of the coronavirus (COVID-19) pandemic, and it increases with some important international events, such as the Russia–Ukraine conflict, the referendum of Brexit, China–US trade war, and Brexit day. On average, the result shows that 32.8% of the volatility in one asset spills over to all other assets. The DCC-GARCH results also indicate that crude oil, bonds, and Bitcoin act as almost pure volatility transmitters, whereas the Dollar index, gold, and S&P500 act as volatility receivers. On the other hand, clean energy is found neutral to external shocks until the first quarter of 2020 and after that time, it starts to behave as a volatility transmitter. Based on the obtained results, we offer some specific policy implications that are beneficial to the US economy and other countries.Graphical Dynamic volatility connectedness between fossil energy, clean energy, and major assets (Bonds, Bitcoin, Dollar index, Gold, and Standard and Poor's 500)

Terms-of-trade and welfare effects of the 2018–2019 US tariff hikes on electrical equipment and plastics

ABSTRACT Despite theoretical analyses of the welfare impact of higher tariffs, empirical studies remain relatively scarce. This study bridges this gap by examining the price, terms-of-trade, and welfare effects of the 2018–2019 US tariff hikes in plastics and electrical equipment products, which are crucial to the US and world trade and are ranked among the top 10 largest total value of imports among the 99 harmonized system broad product groups of US imports during 2018–2019. Accordingly, this study a) derives a flexible partial equilibrium welfare model that accounts for terms-of-trade gains and losses and welfare effects under perfectly and monopolistically competitive market settings; b) estimates trade elasticities using average monthly bilateral exports of trade partners to the US at the 10-digit HS level over the January 2016–August 2020 period; and c) estimates the terms-of-trade, efficiency, and welfare effects of the 2018–2019 tariff hikes using estimated elasticities and trade data at the 4-digit HS level. The results suggest that the tariff hikes yielded negative terms of trade, efficiency, and welfare effects on the US economy, the bulk of the welfare loss resulting from increased international free-on-board import prices. The findings call for in-depth industry-specific analyses before rolling out tariff hikes.

Analysis of the Impact of the United States' Decoupling of Trade with China on the Global Value Chain Division of China's Mechanical and Electrical Industry

This article matches the cases of China US trade frictions to various sub sectors of the electromechanical industry, considers the comparative advantage index of heterogeneous product quality, and uses regression analysis to simulate different scenarios of tariffs. It directly affects the participation of Chinese electromechanical products in the global value chain division of labor, and provides reasonable suggestions for maintaining the comparative advantage position of the electromechanical industry in the global division of labor. The conclusion of this article is as follows: 1. The decoupling and chain breaking measures taken by the United States towards China have had an impact on China's global value chain division of labor in the electromechanical industry, and overall have suppressed its comparative advantage position; 2. The decoupling and chain breaking measures have a more significant impact on the global value chain division of labor in the electromechanical industry in recent times; 3. It is suggested to timely promote measures to extend, strengthen, and supplement the supply chain, and build a unified national factor market to mitigate the negative impact of the United States' decoupling and block chain measures.

Electoral Rewards and Punishments for Trade Compensation

abstract: When globalization harms a community, voters are expected to demand compensation programs. Why, then, would incumbents fail to provide additional compensation following an economic shock? The authors argue that in addition to offering material assistance, government compensation also informs voters about the costs of globalization, generating consternation in the electorate. As a result, providing compensation can hurt incumbents' electoral prospects. This article studies this consternation effect in the United States during the China shock period (1990–2007). The authors use an administrative instrument for access to the US Trade Adjustment Assistance (taa) program, the longest-standing compensation system for workers displaced by international trade. The analysis shows that compensation electorally backfires when distributed to low-shocked regions in which the informational value of compensation is high. The consternation effect can explain why governments often underinvest in compensation programs.