Trade Policy and the China Syndrome
SERIES Working Papers N. 05/2020
40 Pages Posted: 29 May 2020
Date Written: April 1, 2020
The recent backlash against free trade is partially motivated by the decline in manufacturing employment due to rising import competition from China. Previous studies about the “China syndrome” neglect the role of trade policy. This is surprising, given that politicians in high income countries have extensively used antidumping (AD) measures to protect their economies from rising Chinese imports. In this paper, I estimate the causal effect of trade protection on imports and employment, by constructing a new instrument for AD measures based on industries’ importance in swing states and experience in filing AD petitions. I show that AD duties have reduced import competition, decreasing the annual growth rate of US imports from China by 0.40 percentage points on average. They have also helped contain the China syndrome, by increasing the annual growth rate of employment in protected industries by 0.07 percentage points. These results show that protectionist instruments allowed under GATT/WTO rules can be used to attenuate the effects of import competition on employment.
Keywords: Antidumping, Import Competition, Manufacturing Jobs, US-China Trade Relations.
JEL Classification: F13, F14, F16, J20
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