Tariffs and Politics: Evidence from Trump's Trade Wars

Fetzer, Thomas; Schwarz, Carlo

doi:10.2139/ssrn.3349000

Cited by 18 publications

(11 citation statements)

References 64 publications

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“…This finding is also shown byFetzer and Schwarz (2019).35 Auer et al (2018) suggest heavy Republican districts would loose more from revoking NAFTA Ma and McLaren (2018). provide evidence that tariff changes in the years leading up to NAFTA were biased towards industries located in swing states.…”

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confidence: 59%

The Return to Protectionism

Fajgelbaum¹,

Goldberg²,

Kennedy³

et al. 2019

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After decades of supporting free trade, in 2018 the U.S. raised import tariffs and major trade partners retaliated. We analyze the short-run impact of this return to protectionism on the U.S. economy. Import and retaliatory tariffs caused large declines in imports and exports. Prices of imports targeted by tariffs did not fall, implying complete pass-through of tariffs to duty-inclusive prices. The resulting losses to U.S. consumers and firms who buy imports was $51 billion, or 0.27% of GDP. We embed the estimated trade elasticities in a general-equilibrium model of the U.S. economy. After accounting for tariff revenue and gains to domestic producers, the aggregate real income loss was $7.2 billion, or 0.04% of GDP. Import tariffs favored sectors concentrated in politically competitive counties, and the model implies that tradeable-sector workers in heavily Republican counties were the most negatively affected due to the retaliatory tariffs.

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confidence: 59%

The Return to Protectionism

Fajgelbaum¹,

Goldberg²,

Kennedy³

et al. 2019

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“…Retaliation from countries other than China has much smaller impacts since it aects smaller ows. Indeed, Fetzer and Schwarz (2019) and Blanchard, Bown and Chor (2019) recall that products aected by retaliation are mainly chosen in order to aect areas that supported D. Trump in the 2016 presidential election, i.e. based on political considerations.…”

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confidence: 99%

Shooting Oneself in the Foot? Trade War and Global Value Chains

Bellora

Fontagné

2019

SSRN Journal

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By entering into a trade war, the US administration reached its goal to weaken the Chinese economy and protect certain industries, but this comes at a cost for the US economy itself, because GVCs are ubiquitous in most of the protected sectors. The increase in producer costs, caused by increased tariffs on goods for intermediate consumption, is detrimental to the competitiveness of US producers. This translates into losses of US market shares on export markets, adding to the toll of retaliation by China and other affected countries. Overall, US exports to the world post a sizeable decrease. Because of the tariffs in place as of February 2020, in our General Equilibrium setup, three quarters of the sectors decrease their value added in the US. Consistent with political economy determinants, these twists of value added are transmitted to production factors, leading to sizeable creation and destruction of jobs, and reallocation of capital to the benefit of protected sectors, mostly at the expense of their clients, i.e. downstream industries.

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“…Beginning in 2018, various trade actions undertaken by the Trump administration led to retaliatory actions from major U.S. trade partners including China, Canada, Mexico, the European Union, and India (Brown and Kolb ). While many of the trade issues in dispute were outside the sector, retaliation was heavily targeted towards agriculture due to its reliance on trade and the political preferences of farmers and farm groups in the 2016 election (Burak, Baylis, and Coppess ; Fajgelbaum et al 2020; Fetzer and Schwarz ). Given the importance trade has on U.S. commodity prices and farm income, the Trump administration, through the United States Department of Agriculture (USDA), has outlined a mechanism to address trade‐related damage being inflicted on U.S. farm households.…”

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confidence: 99%

Distribution of Market Facilitation Program Payments and their Financial Impact for Illinois, Kansas, and Minnesota Farms

Paulson¹,

Featherstone²,

Hadrich³

2020

Applied Eco Perspectives Pol

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The recent infusion of cash into production agriculture due to damages from retaliatory trade actions has been large. Up to $28 billion has been authorized through the Trade Mitigation Program in 2018 and 2019, accounting for a significant share of farm income and providing liquidity in an extended period of low prices. Using farm-level data from Illinois, Kansas, and Minnesota, this research examines the importance of market facilitation program payments in supporting incomes and reducing credit default risk. Results illustrate the additional liquidity provided for farms, and the distributional effects across states and among farms within each state.

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Tariffs and Politics: Evidence from Trump's Trade Wars

Cited by 18 publications

References 64 publications

The Return to Protectionism

The Return to Protectionism

Shooting Oneself in the Foot? Trade War and Global Value Chains

Distribution of Market Facilitation Program Payments and their Financial Impact for Illinois, Kansas, and Minnesota Farms

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