Exchange Rate Misalignments and International Trade Policy: Impacts on Tariffs
34 Pages Posted: 9 Mar 2012
Date Written: November 2011
The debate on “exchange wars and trade wars” is raising the attention of experts on international trade and economics. The main purpose of this paper is to analyze the impacts of exchange rate misalignments on one of the most traditional trade policy instruments – tariffs, as defined by the WTO – World Trade Organization. It is divided into three sections: the first one examines the effects of exchange rate variations on tariffs and its consequences for the multilateral trade system; the second explains the methodology used to determine exchange rate misalignments and also presents its results for Brazil, US and China; and the third summarizes the methodology applied to calculate the impacts of exchange rate misalignments on the level of tariff protection through an exercise of “misalignment tariffication".
Keywords: misalignment, exchange rate, tariffs, WTO
JEL Classification: F10, F13
Suggested Citation: Suggested Citation