US Trade Research Articles

Sanctioning Russia’s oligarchs – with shame

ABSTRACT When most people hear the word “sanctions,” they think of formal economic and political punishments leveled at rogue regimes, like the US trade embargo against Iran, or the threatened expulsion of Hungary from the European Union. Both kinds of sanctions have been leveled against Russia since its February 2022 invasion of Ukraine. But the past eight months have also brought a different sanctions strategy to the fore: one aimed at stigmatizing the individuals close to Putin’s regime, in hopes of shattering elite support and encouraging revolt. These sanctions, which have led to the freezing and seizure of Russian oligarchs’ assets in the West, have prompted the first murmurs of public dissent by Russian oligarchs in nearly two decades. The sanctions have consequently been effective in destabilizing Putin’s authority, cracking the façade of control that has previously deterred attempts to topple him. This article explains the sociological dynamics of this strategy, and how stigma can be effective even where legal and economic punishments fail.

Personal Factors Influencing US Travelers’ Sentiments Toward Travel Policies to Cuba

The United States and Cuba have navigated a strained political and economic relationship over the past sixty years; the tone of the relationship is in flux according to Cuban and US leadership, and most recently, COVID-19. Anticipating US travelers’ sentiments towards access to Cuba is more crucial now because of resulting policies playing out within the intersection of the shifting dynamics of the virus and the tumultuous political climate within the US. This study identified the personal factors that influence US travelers’ sentiment towards the US trade embargo and travel restrictions to Cuba. Results reveal that respondents with higher educational achievements, Spanish-speaking ability, Cuban knowledge, and those well-traveled, were likely to oppose the embargo and support access to Cuba.

Multiple shocks and the external market structure of China’s manufacturing industry

This study examines multiple shocks to the external market of China’s manufacturing industry based on a trade model with multi-level unobserved factors. We find that the global external market of main industries is suffering constant downward shocks since 2008, while the traditional (non-traditional) markets are further affected by downward (upward) shocks. Private enterprises are more sensitive to shocks. Further, the adjustment of US trade policy toward China has caused China’s exports to the US to deviate from the normal path by around 10% from 2015 to 2019, while having no significant effect on China’s exports to the other traditional markets.

The Trilogy of the Chinese Apple Futures Market: Price Discovery, Risk-Hedging and Cointegration

The agricultural futures market plays an extremely important role in price discovery, hedging risks, integrating agricultural markets and promoting agricultural economic growth. China is the largest apple producer and consumer in the world. In 2017, Chinese apple futures were listed on the Zhengzhou Commodity Exchange (CZCE) as the first fruit futures contract globally. This paper aims to study the efficiency of the apple futures market by using the Wild Bootstrapping Variance Ratio model to estimate the price discovery function, the ARIMA-GARCH model to estimate the risk-hedging function, and the ARDL-ECM model to estimate the cointegration relationship of the futures and spot market. Experimental results firstly demonstrate that the apple futures market conforms to the weak-form efficiency, which indicates that it is efficient in price discovery. Secondly, the apple futures market is not of semi-strong efficiency because it generated abnormal profit margins amid China–US trade friction, climate disaster, and COVID-19; in terms of the degree of impact, the COVID-19 pandemic had the greatest impact, followed by the rainstorm disaster and trade friction. Thirdly, the results of this study indicate that the cointegration relationships exist between the futures market and the spot markets of the main producing areas. This paper is not only conducive to sustainable development of the global fresh or fruit futures market, but also has potential and practical importance for China in developing the agricultural futures market, strengthening market risk management and promoting market circulation.

Tariffs, agricultural subsidies, and the 2020 US presidential election

AbstractThis paper provides evidence on the effects of US and Chinese trade policies on the 2020 US presidential election. In response to a series of US tariffs imposed on Chinese goods, China imposed retaliatory tariffs, especially on US agricultural products, which largely affected Republican‐leaning counties. The US government then subsidized US farmers by providing direct payments through the Market Facilitation Program (MFP) to mitigate the Chinese retaliatory tariffs. Using the universe of actual county‐level MFP disbursement data, we document that MFP payments relative to the Chinese retaliatory tariff exposure were higher in solidly Republican counties, implying that the Trump administration allocated rents in exchange for political patronage. We also find that MFP payments outweighed the estimated impact of Chinese retaliatory tariffs and led to an increase in the Republican vote share in the 2020 presidential election. Finally, we uncover evidence that China's retaliatory trade policy and the corresponding US agricultural policy exacerbated political polarization in the US, especially the rural–urban divide.

China and global value chain restructuring

ABSTRACT Global value chains have been a major means of manufacturing and trading goods internationally. Economic efficiency was the sole factor driving the proliferation of GVCs and the China-centered GVCs were established in a variety of manufactured products. In recent years, the China–US trade war and the unfolding COVID-19 pandemic have sent shock waves and disrupted smooth operations of GVCs, which has triggered the geographic restructuring of GVCs, in particular value chain diversification away from China. This paper analyzes the centrality of China in value chains and the vulnerabilities of GVCs exposed to the trade war and the pandemic. This paper provides comprehensive empirical evidence on GVC restructuring from different perspectives and discusses policy options that China could cope with the tide of the value chain diversification.

US Trade Policy With China: Proposing A New Framework for US Economic Competitiveness

Due to the Biden Administration’s decision to uphold a large majority of the Trump administration’s protectionist trade policies, US manufacturing industries are failing to control the market share. This paper explores the proper solutions that need to be taken to restore US competitiveness with China, prioritizing US cooperation with allies and China instead of unwarranted tensions. This paper analyzes the effects of US tariffs on Chinese imported goods on Foreign Direct Investment (FDI) in the US, US Gross Domestic Product (GDP), US manufacturing wages, and overall US manufacturing costs to argue that key US tariffs on Chinese imports should be eliminated. This paper explores the benefits of trade specialization and its effects on the US’s Revealed Comparative Advantage (RCA) to argue that the US should champion free trade policies such as revitalizing the Trans-Pacific Partnership (TPP). Finally, this report recommends that the US kickstart wholesale WTO reforms that change the process by which member states identify as “developing” or “developed” nations, and institute stricter litigation statutes against Chinese WTO violations.

Strengthening the Global Importance of China’s Economy in the Post-Pandemic Period

Despite a pandemic that has brought most of the global economy to its knees, Chinese economic growth continued in 2020 and strongly accelerated in 2021. An almost certain scenario in which China is becoming the leading world economy already brings strong geopolitical implications, primarily in the form of shaking the existing world order, which is practically managed by Washington. The key reason for the strong growth of China’s economy is the high share of both savings and investments in GDP (over two-fifths each) in a very long period, together with its impressive technological progress. In this regard, the direct reason for the current tension between the two countries is China’s economic transformation towards the upper end of global industrial value chains. Attempts to end China’s economic expansion through forced technological unbundling, US trade sanctions, or forced changes in global supply chains, seem doomed to failure given its vast internal market and conquest of entire product ranges or supply chains. America will continue with its efforts to maintain primacy over China in the basic technologies of the future, from artificial intelligence to quantum computing, with the help of huge investments in science. Although the US and China are not necessarily on the path of confrontation, this certainly cannot be ruled out. The aim of this paper is to project the future of the American and Chinese economies' dynamics of GDPs. The applied methodology is based on a linear projection of the GDP growth of both countries in the period after 2026.

The Impact of Price Support Policies and Public Emergencies on Agricultural Futures Markets — A Multifractal Cross-Correlations Analysis between China and the US

This paper investigates the presence and asymmetry of cross-correlations between agricultural futures markets in China and the US as well as the impact of price support policies and public emergencies (Sino–US trade conflict and COVID-19 pandemic) on the cross-correlations by the multifractal methods. The results show that the fluctuation characteristics and conduction directions of cross-correlations are asymmetric. The price fluctuations of soybean and corn futures in China are easier to be affected by the US soybean and corn futures. We find that the cross-correlations are multifractal under different price support policies and pubic emergencies. The price support policies with greater interventions on soybean and corn prices have aggravated the complexity of cross-correlations between the two futures markets in China and the US. The soybean and corn futures in China are hardly correlated to the US futures under the dual effect of the Sino–US trade conflict and the COVID-19 pandemic. The Sino–US trade conflict strengthens the complexity of cross-correlation for soybean futures and weakens it for corn futures, while the COVID-19 pandemic enhances the complexity of cross-correlations for soybean and corn futures. In addition, the fat-tailed probability distributions in different price support policy and public emergency periods have a dominant influence on the multifractality of cross-correlations.

The pattern of international trade between Bangladesh and USA: Heckscher–Ohlin and Rybczynski analysis

PurposeResearch based on Bangladesh–US trade data examines the Heckscher–Ohlin model and the Rybczynski hypothesis in this study.Design/methodology/approachOrdinary least square (OLS) techniques are used in this study, which relies on data from the NBER International Trade and Geography Data and the UN Comtrade Database for the years 2018 and 2008.FindingsThe research shows that trade between the United States and Bangladesh follows Heckscher–Ohlin and Rybcyzinski's trade predictions. According to the study, since labor is in plentiful supply in Bangladesh, Bangladesh's labor-based sectors have a higher US labor-to-capital import shares than US capital-based industries. As Bangladesh has not changed significantly from a labor-based country since 2008, it retains the same pattern even though the share of US unskilled labor-based sectors imported from Bangladesh decreased in 2018.Originality/valueThe findings of this study have a wide range of implications for both trade theory and policy debates between Bangladesh and the United States.

Macroeconomic Effect of The U.S. Tariff on Steel and Aluminum

In the context of deglobalization, the United States proposed a trade policy of imposing tariffs on steel and aluminum in March 2018. This paper first discusses the possible motivations behind the tariff levitation by the United States. It also analyzes the impact of US tariffs on its trading partners and itself under the unilateral tariff model and the bilateral tariff model. The conclusion of the analysis is that the impact of this US trade policy on the economy of steel and aluminum importing countries, especially in the long run, is not as pessimistic as imagined. And considering the impact of the tariffs, as well as the EU and China’s trade countermeasures on the U.S. economy, the U.S. should perhaps reassess what this policy has brought to the U.S.

The Prediction of Public Risk Perception by Internal Characteristics and External Environment: Machine Learning on Big Data.

Presently, the public’s perception of risk in terms of topical social issues is mainly measured quantitively using a psychological scale, but this approach is not accurate enough for everyday data. In this paper, we explored the ways in which public risk perception can be more accurately predicted in the era of big data. We obtained internal characteristics and external environment predictor variables through a literature review, and then built our prediction model using the machine learning of a BP neural network via three steps: the calculation of the node number of the implication level, a performance test of the BP neural network, and the computation of the weight of every input node. Taking the public risk perception of the Sino–US trade friction and the COVID-19 pandemic in China as research cases, we found that, according to our tests, the node number of the implication level was 15 in terms of the Sino–US trade friction and 14 in terms of the COVID-19 pandemic. Following this, machine learning was conducted, through which we found that the R2 of the BP neural network prediction model was 0.88651 and 0.87125, respectively, for the two cases, which accurately predicted the public’s risk perception of the data on a certain day, and simultaneously obtained the weight of every predictor variable in each case. In this paper, we provide comments and suggestions for building a model to predict the public’s perception of topical issues.

Free Trade's Organized Progressive Opposition

Abstract Populist, protectionist, and progressive opposition to globalization are renascent among voters and politicians, but which of these ideologies have successfully inspired interest group mobilization? To answer this question, we collect original data on thousands of groups’ participation in highly organized coalitions opposed to US trade policy and globalization. Examining the types of groups that compose coalitions, variation in activation across issues, and coalitions’ written statements, we find that their motivations are mainly progressive, focused on the environment, human rights, economic justice, and reducing corporate power. We also focus on progressives’ labor union allies, showing that their participation in anti-trade coalitions is driven by both sincere progressive and classic protectionist motives. Thus, a progressive–labor alliance espousing mainly demands for fair trade, not plain protectionism, dominates public activism against US trade agreements. This interest group opposition has no match on the political right, suggesting that the recent efflorescence of populist anti-globalization may not last, even as progressive fair traders use their superior mobilization to endure.

1980'lerde Japonya-ABD İlişkisi ve Dünya Yarı İletken Konseyinin Kuruluşu

Integrated circuits (ICs or microchips) are used in high-tech consumer electronics such as computers and automobiles. In the history of IC manufacturing, the 1980s featured rapid improvement and spreading of the chip manufacturing technology around the globe. This led to the United States manufacturers which had been the incumbent leaders so far to face new competition. The Japanese manufacturers had effectively captured both the US and world market by the mid-1980s. In reaction, the US manufacturers filed complaints to the Office of the US Trade Representative leading to an official protective initiative. Under the threat of being cut out of the largest electronics market at the time, Japan agreed to sign the 1986 Japan-US Semiconductor Agreement, with significant demands placed on its industry. The agreement was renewed in 1991 and in 1996, the expectation on the US side was another renewal. Instead, Japan proposed founding the World Semiconductor Council (WSC). This major framework change from a bilateral agreement between governments to a multilateral forum of private sector representatives begets the question of “why.” This paper presents a historical analysis of the factors that led to the Japanese proposal for foundation of the WSC. In this analysis, explanation factors are divided into international and domestic factors from the viewpoint of Japan. It is concluded that the effect of the US diplomatic advantage in the 1986 agreement and Japan’s own domestic political economic transformation culminated in the WSC proposal.

Supply chain disruptions and containerized agricultural exports from California ports

AbstractWe study the trade effects of the 2021 supply chain disruptions on containerized agricultural exports from California ports. Our event studies show that port congestion and container shortages reduced agricultural exports by 22% from May to November 2021. The export losses exceed $3.2 billion and vary substantially across commodity groups, with California tree nut producers facing the brunt of the financial repercussions. California agriculture's losses surpass those from the 2018 China–US trade war by far. The export disruptions mirror the fact that California ports are among the least efficient globally.

Asymmetric long-run effect of exchange rate on bilateral trade balance between USA and China

Purpose This paper aims to investigate asymmetric long-run effects of bilateral exchange rate on US trade imbalances with China and to examine if the effects are the same under China’s fixed and managed floating exchange rate systems. Design/methodology/approach The authors estimate both linear autoregressive distributed lag (ARDL) model assuming symmetric effect and nonlinear ARDL model assuming asymmetric effect of exchange rate on US trade deficit with China. The authors use data from 1994Q1 to 2005Q2 (under Chinese fixed exchange rate system), from 2005Q3 to 2021Q3 (under Chinese managed floating exchange rate regime), and from 1994Q1 to 2021Q3 (overall data). Findings The Chow test indicates 2005Q3 is a structure break point. Further, the results suggest the effects of bilateral exchange rate on US trade deficit with China are not the same under different exchange rate systems. The asymmetric long-run effect of bilateral exchange rate does exist. The results also demonstrate the depreciation of Chinese currency will not significantly affect US trade imbalances with China. Research limitations/implications Based on the results, the Chinese Government should embrace a more transparent and flexible exchange rate system. It will not significantly hurt Chinese trade balance, but it will help to reduce the tension between the USA and China. Originality/value All previous literature (except two papers) related to the effect of Chinese exchange rate on US trade deficit with China assume the effect is symmetric, and all (except one) use data under different Chinese exchange rate systems. To the best of the authors’ knowledge, this is the first paper that studies the possible asymmetric long-run effect of bilateral exchange rate under different Chinese exchange rate regimes.

US Trade Preference and Export Performance of Sub-Saharan Africa (SSA): Evidence from the African Growth and Opportunity Act (AGOA)

AbstractThe African Growth and Opportunity Act (AGOA) was signed into law in May 2000 to encourage increased trade and investment between the United States and Sub-Saharan Africa (SSA). It provides eligible countries with duty free access to the US market for over 1800 products in addition to those available under the Generalized System of Preferences (GSP). The benefits extend through 2025. This study explores the link between US trade preferences under AGOA and beneficiary country exports. Using a large US import database, the study examines the extent to which AGOA influences export performance. It also examines the moderating roles of rule of law and foreign direct investment. The results largely indicate that AGOA has a positive and significant effect on beneficiary country exports. It also shows that rule of law moderates the relationship between AGOA and export performance. We believe that AGOA will target foreign direct investment (FDI) to SSA from other advanced regions such as the EU to take advantage of the US market. However, the role of FDI appears to be weak in moderating the relationship between trade preferences (tariff concessions) and exports from beneficiary countries to the US market.

Effect Evaluation of WTO Dispute Settlement Mechanism Based on Artificial Neural Network

In today’s rapid economic development, trade exchanges between countries are increasingly close, and there are inevitable trade frictions that follow as a consequence. The World Trade Organization (WTO) dispute settlement mechanism (DSM) has become a predominant choice to deal with trade frictions for majority of the WTO member states. As part of the process of applying the Sino-US trade friction to the WTO DSM, the rise of US trade protectionism has caused serious damage to the WTO DSM. Also, the DSM similarly exposes its own inherent defects. Hence, the research on improvement of the WTO DSM under the background of trade friction has profound practical value. Based on this background, this paper proposes a framework for the effective evaluation of WTO DSM based on the artificial neural network. The contributions of the paper include the following: (1) Introduction of domestic and foreign scholars’ research on different issues in the WTO DSM, wherein the retaliation mechanism is introduced in detail. Also, it is conducive for further deepening of the purpose and significance of the retaliation system in the WTO DSM. (2) The characteristics and structure of the CNN are introduced, and a suitable evaluation system for analyzing the impact of WTO DSM is constructed. Further, an evaluation model based on the CNN is proposed. (3) As per the dimension principle of CNN interlayer calculation, the network structure parameters are selected considering an optimal comprehensive evaluation index of the network. The results verify the effectiveness of the proposed method. Finally, when compared with the other state-of-the-art network models, it is found that CNN generates the highest evaluation accuracy.

Spillover effects in Chinese carbon, energy and financial markets

AbstractAs China's carbon market continues to develop, its close connection with the financial and energy markets is becoming increasingly apparent. A systematic study of the spillover effects between markets is important, as it can help prevent excessive fluctuations in carbon prices. With this in mind, this study proposes a time‐varying parameter vector autoregression with Lanne–Nyberg decomposition extended joint connectedness approach to analyze quantitatively the spillover effects in the “carbon–energy–financial” system. Empirical results show that a bidirectional spillover effect exists among markets. Not only does the carbon market have the most pronounced return (volatility) linkages with the natural gas (clean energy) market, but the information connected with the energy markets is also more closely linked than with the financial markets. We also find that market fluctuations, caused by the China–US trade conflict and the COVID‐19 pandemic, have increased spillovers in the system.

The China-US Trade Conflict and Its Impact on the World Trade System and the Future of Multilateralism

The trade conflict between China and the US has an impact on many levels. The initial discussion was focused on the economic effects both feared and caused by the trade restrictions. This study, however, will go further than an economic-empirical analysis. Rather, it addresses the structural implications of the conflict: as a result of the US blockade of the World Trade Organisation (WTO) Appellate Body, the functioning of the world trade system remains in question. Even though a number of Member States currently participate in a substitute interim dispute settlement system outside the WTO, the future of the world trade system is nonetheless closely tied to a functioning dispute settlement process. For that is the only means by which to guarantee that the contracting parties can trust that their mutually agreed rights and obligations will be respected – and that how dispute settlement will ensure trust in the world trade system as a whole. But what are the prospects for dispute settlement in a situation that is characterized not only by stagnation, but above all by open trade disputes, and for which there is no foreseeable resolution? Are we now witnessing not only a crisis of dispute settlement, but more so, an inability for dispute settlement to function in a multilateral arrangement that lacks a perspective? The author considers the US blockade to be a consequence of the increasing intensification of the global competitive situation, within which the liberalization interests of key actors are going through a transformation. The study will demonstrate how this is leading to more differentiated forms of trade policy, economic and geopolitical integration that operate beyond the previous multilateral liberalization concepts. Nevertheless, the world trade system has an undeniably central role to play in addressing urgent issues of our common future. The author discusses the challenges that lie ahead and asks how further developments can be achieved. World Trade System, Appellate Body, Dispute Settlement, China-US Trade Conflict, Delegation Sovereign Rights, Sovereignty, Decision Making Practice, US Trade Representative, Non-Market Economy, State-Led Economy, Governance, Trade Liberalization, Blockade, Multilateralism, Global Competition