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PurposeThe paper extends the robust political economy framework to analyze the impact of tariffs on the entrepreneurial market process. It proposes that the unintended consequences of using trade policy to bolster a nation's economy will inevitably prevent an economy from allocating its resources to their highest-valued use. The study aims to expand the robust political economy literature to international trade.Design/methodology/approachThe paper develops a robust analysis of trade policy and illustrates it with two case studies of trade wars: The Chicken War (1963) and the US–Canada softwood lumber disputes (1982-present).FindingsThe paper provides theoretical insights into how the entrepreneurial market process is distorted by trade barriers. The case studies show that the theoretical insights have real-world implications that should not be ignored when planning trade policy.Originality/valueThis paper applies a robust political economy framework to international trade.

Anniston, AL 36201 Warren, MI 48397-5000 8a. NAME OF FUNDING/SPONSORING 8b. OFFICE SYMBOL 9. PROCUREMENT INSTRUMENT IDENTIFICATION NUMBER ORGANIZATION (if applicable) D A% NEo07-5-C-R0 8c. ADDRESS (City, State, and ZIP Code) 10. SOURCE OF FUNDING NUMBERS

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This paper provides evidence for the explanatory power of the theory of entrepreneurship through analysis of one of the most widely publicized acts of American entrepreneurship: Ford’s five dollar day. Economists have debated the proper classification and interpretation of the Ford Motor Company’s wage policy extensively. The majority categorize it as an efficiency wage policy, though others argue for rent sharing or the high-wage doctrine. This article argues that Ford acted as an alert, innovative entrepreneur who exercised judgment under uncertainty when he developed the 1914 labor policy and Ford Sociological Department. Viewing the events of 1913 and 1914 at Ford through this lens reveals that Ford’s personnel innovations were not merely efficiency wages, rent sharing, or motivated by the high-wage doctrine. Rather, Ford’s actions are best understood as those of a profit-seeking entrepreneur.